Sent: Friday, 17 March 2017 3:30 p.m. To: All Finance and Performance Committee members
CCOs second quarter report for 31 December 2016 Subject: Attachments:
On behalf of Cr Ross Clow, Chair Finance and Performance Committee
Dear Mayor and Councillors, Please find attached the Council-controlled organisations’ second quarter report for 31 December 2016.
Initially, these were on the agenda for the 21 March Finance and Performance Committee (F&P) with CCOs in attendance. At the 13 December F&P meeting, the CCOs’ chairs presented their quarterly reports. The committee had a robust conversation which ran for approximately three hours. Given the time to discuss each CCO and the amount of other items that require decisions, we could not accommodate the CCO Q2 report discussion on the 21 March agenda.
I recognise the importance of the performance discussions with CCOs and have tasked council staff to work on a new format as part of the CCO Accountability Review. This could include a dedicated day for quarterly performance discussions.
The CCOs will be attending the F&P Annual Plan 2017/2018 workshops schedule on 10, 11 and 17 May. This will be an opportunity to discuss their financial performance and budgets in more detail.
If you have any questions you wish followed up on the Q2 reports, please contact Robert Irvine. He will co-ordinate a response for you. The reports will also be made publicly available on the council website.
Regards
Cr Ross Clow
Chair of Finance and Performance Committee
1
Auckland Council Investments Ltd
Quarterly Report
Quarter ended 31 December 2016
CCO Governance and Monitoring Committee
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 1 of 11
Table of Contents
1. Executive Summary ...... 3 2. Strategic issues and focus areas ...... 4 3. Highlights for the last quarter ...... 5 4. Future outlook ...... 7 5. Key Deliverables ...... 8 6. Financial Performance ...... 9 7. Performance measures ...... 10 8. Contribution to Māori outcomes ...... 10 9. Key Local Board issues ...... 11 10. Risk Management ...... 11
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 2 of 11
1. Executive Summary
The ACIL parent recorded an after tax surplus of $52m for the six months to December 2016, $9m higher than the YTD budget ($43m). This was mainly due to the higher than planned POAL dividend of $28.4m vs budget of $19.6m.
POAL continue to meet their financial and volume targets in a challenging environment.
AIAL paid a final dividend of $24m on 21 October 2016, which was $0.1m higher than budget ($23.9m).
The AIAL share price dropped from $6.50 (30 June 2016) to $6.25 (31 December 2016) during the six months, leading to a $67m decrease in the value of shares owned by ACIL. As at 31 December 2016, the market value of ACIL’s investment in AIAL was $1.7 billion.
AFSL recorded an after tax surplus of $0.7m for the six months to December 2016.
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 3 of 11 2. Strategic issues and focus areas
ACIL is focussed on achieving the targets outlined in ACIL’s 2016/19 SOI.
In particular, • maintaining its governance role and responsibility; and • encouraging initiatives to increase returns balanced by sound management of risk; and • working with POAL to ensure commercial objectives take account of stakeholder interests; and • seeking to optimise the value of AFSL by working with the Council, ATEED and AFSL to determine the long term future of AFSL.
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 4 of 11 3. Highlights for the last quarter
Auckland International Airport Limited (AIAL) The AIAL share price dropped from $6.50 (30 June 2016) to $6.25 (31 December 2016), representing a decrease in ACIL’s investment for the six months of $67 million. As at 31 December 2016, the market value of ACIL’s investment in AIAL was $1.7 billion.
Auckland Airport’s December 2016 international passengers (excluding transit passengers) were the highest ever for a single month. The 960,861 passengers were 67,000 higher than the previous record set in January 2016, and 13.1% higher than December 2015. The December 2016 result was driven by capacity increases on North American and Asian routes, which increased visitor arrivals over summer, as well as by the number of people visiting friends and relatives over the Christmas and New Year holiday period.
Ports of Auckland Limited (POAL)
Features for the quarter include:
• Revenue for the quarter is up on last year with higher container, breakbulk and car volumes. Costs for quarter are in line with budget but ahead of last year due to extra spend on repairs and maintenance. • Overall volumes to the quarter and half year are ahead of last year and budget expectations. • Construction of the northern berth continues. All piles to the main structure have been installed, piling for the eastern dolphin and western tie-in is progressing. Approximately 40% of the deck has been constructed. Completion of the main structure is scheduled for July. • Crane specifications are being worked on and POAL is awaiting clearance on height restrictions from Council. Plans are in place for cranes to be ordered by mid-2017 with cranes expected to be in Auckland around August 2018 and commissioned late 2018. • Straddle automation project is on track for completion by mid 2019 and will significantly improve productivity. • At ACIL’s request, POAL have commissioned NZIER to prepare a report looking at the economic benefits of retaining and growing the car trade in Auckland versus other ports. • Work is underway to scope the extent of the channel dredging with expected completion by FY20. • Lost time injury rate was one for the quarter ended 31 December 2016 (one for the same quarter last year). • POAL is closely monitoring and managing health and safety at its workplace.
Auckland Film Studios Limited
AFSL produced an after tax surplus of $0.7m for the six months to December 2016.
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 5 of 11 The strategic issue facing AFSL is how it fits with ATEED’s plans to encourage private sector investment in the screen production industry and how it progresses a rebuild, if any, at its Henderson studios. PDA have confirmed their long term interest in the existing Henderson site, and AFSL and ACIL are looking at options which would involve retaining the land in Council ownership while encouraging private sector involvement in expanding screen production facilities
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 6 of 11 4. Future outlook
ACIL expects to meet its 2016/17 budgeted dividend payment to Auckland Council of $85.9m.
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 7 of 11 5. Key Deliverables
Key deliverables from last quarter
Deliverable $’m Completed/ carry Status Comments over to next quarter/ deferred
ACIL is working with AFSL to Carry over to next Finalise decision on AFSL re-build. N/A finalise a long term plan for the quarter Henderson site
On-going monitoring of wholly Regularly meet with the Chair owned subsidiaries N/A On going and Chief Executive of POAL, AFSL and AIAL
Council reporting requirements ACIL Q2 reporting pack submitted N/A Completed to Council on time.
Annual plan ACIL plans to deliver the annual N/A In progress plan on time
ACIL plans to deliver the SOI on Draft 2017/2020 SOI N/A In progress time Appoint a further director to AFSL N/A Completed
*RAG Status: Green - Performance on target or better Amber - Target may not be met, corrective action taken Red - Target may not be met, action required
Key deliverables for next quarter (4-6 key items)
Deliverable Comments
31 December quarterly report Draft is due to Council 17 February 2017 Assessment of rebuild opportunity Finalise discussions with Auckland Council and ATEED and provide guidance at Henderson film studios to the AFSL Board Budget to SAP Cooperate with Council in completing the project Annual plan Updated annual plan is due to Council 24 February 2017 SOI Draft is due to Council 1 March 2017 Appoint a further director to POAL ACIL expects to appoint a director before Mar 2017
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 8 of 11 6. Financial Performance
ACIL Parent ACIL Parent ACIL Parent ACIL Parent Actual Budget Full year Full year $’m Variance YTD YTD Budget Forecast 31 Dec 2016 31 Dec 2016 2017 2017
Operational Revenue 52.4 43.5 8.9 86.9 86.9 AC funding 0.0 0.0 0.0 - -
Expenditure excluding interest 0.4 0.5 0.1 1.1 1.1
Interest expense 0.0 0.0 0.0 0.0 0.0 Net surplus after tax 52.0 43.0 9.0 85.9 85.9 Dividend to Council 0.0 0.0 0.0 85.9 85.9 Capital Expenditure - - - - - AC funding - - - - - External funding - - - - -
*RAG Status:
Green - Performance on target or better Amber - Target may not be met, corrective action taken Red - Target may not be met, action required
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 9 of 11 7. Performance measures
Key performance measures
Measure Year-end target On track Last Actual
Operating Surplus after Tax of $85.9m Expect to meet $66.5m the ACIL parent Return on Equity 6.8% Expect to meet 21.4% *
Dividend Distributions $85.9m Expect to meet. $66.5m Quarterly report to the The quarterly Target met Target met Accountability and Performance report is provided Committee within specified timeframes and meets requirements of the SEG
Timely consideration of relevant Competent POAL and AFSL are considered POAL and AFSL information with regard to Directors are to have competent directors. are considered candidates for POAL and AFSL appointed to have director appointments competent directors.
POAL’s Return on Equity 9.1% Expect to meet 15.6% *
Exercise voting rights in AIAL on Voting rights are Target met ACIL exercised all decisions/motions requiring exercised its voting rights shareholder input at the AIAL ASM in October 2016.
AFSL's Net Profit After Tax NPAT is positive Expect to meet $0.8m
* includes revaluations
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 10 of 11 8. Contribution to Māori outcomes
ACIL's management of strategic assets provides financial returns to the Auckland Council which can be used by the council to deliver services and programmes, including services and programmes of particular benefit to Maori.
ACIL is a member of Te Toa Takatini -Maori Responsiveness High Performance Council established by Council’s executive leadership group. ACIL has encouraged POAL and AFSL to develop knowledge of and support Council’s policies and contribution to Maori wellbeing.
POAL is entering into a partnership with iwi and the local community to restore and enhance the environment of POAL land around the signal station at Manukau South Head, an area of culture significance to Ngati Te Ata.
9. Key Local Board issues
ACIL has offered to meet all Local Boards and advisory boards to provide them with a presentation on ACIL’s performance and objectives. ACIL has had 8 meetings in the 2015/16 year.
10. Risk Management
i. ACIL follows and applies Auckland Council’s Enterprise Risk Management Framework. ACIL management is responsible for identifying, assessing, controlling and managing risks. The risks are identified in a risk register showing for each risk, its consequence and likelihood on a scale of 1 to 5 which enables a risk score and risk rating to be identified. The risk register is reviewed by the board. Risks are those events which if they occur will result in loss to the organisation. Losses may be financial, reputational, reduction in efficiency or effectiveness etc. ii. There has been no change in ACIL’s approach to risk management. iii. There are no outstanding internal or external audit issues. iv. All controls are operating effectively. No events have occurred or are anticipated that will have a financial impact on the Council Group. v. All controls are operating effectively and currently no events have occurred at a senior management or governance level that would impact on the wellbeing or reputation of ACIL or Auckland Council.
ACIL Quarterly Report – Quarter ended 31 December 2016 Page 11 of 11
Auckland Transport Quarterly Report
Quarter ended 31 December 2016
CCO Governance and Monitoring Committee
AT Metro launches Child Weekend Fares 99 cent weekend fares for children 5 to 15 travelling on an AT HOP card
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 1 of 25 Table of Contents
1. Executive summary ......
2. Strategic issues and focus areas ......
3. Highlights for the last quarter ......
4. Future outlook ......
5. Key deliverables ......
6. Financial performance ......
7. Performance measures ...... 8. Contribution to Māori outcomes ...... 9. Key Local Board issues ......
10. Risk Management ......
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 2 of 25 1. Executive summary
Key Achievements for the Quarter Auckland Transport (AT) has had a successful quarter with progress on a broad front and a number of significant milestones achieved. AT is well set up for delivery across the remainder of the year, despite a busy programme of work. Highlights for the second quarter were: New Network went live in South Auckland under the PTOM (Public Transport Operating Model) contract model. The New Network is a complete transformation of Auckland’s public transport network. It fundamentally changes the way bus services operate across Auckland. Ōtāhuhu Bus Interchange was opened to the public. This coincided with the start of the New Network in South Auckland. South Aucklanders can look forward to seeing more buses on the road and at better frequencies than before. Public transport patronage at Ōtāhuhu Station has increased by 9% in the past 12 months with a total of 117,000 passengers using the station to board trains in the year to August 2016. Albany Highway North upgrade was opened to the public. A key route on the North Shore, finishing six months ahead of schedule and on budget. The upgrade improves safety significantly, encourages the use of public transport as well as cycling and walking alternatives. These improvements will be of great benefit to the local community, and in particular the 5,000 children who go to school in the area. Mt Roskill Safe Route was opened to the public. This is a new cycling and walking route connecting Mt Roskill with the Manukau Harbour. It will provide greater travel options for locals. Section one of Glen Innes to Tamaki Drive Shared Path - Te Ara Ki Uta Ki Tai (the path of the land and sea) was opened to the public. The path is along the scenic route through the heart of East Auckland that will make it easier and safer to get around by bike and foot. Mission Bay street upgrade. AT has partnered with the Orākei Local Board and the Mission Bay business community for a street and footpath upgrade (Streetscape) just in time for summer. Pukekohe Station upgrade work commenced. The upgrade will make it easier for people in Pukekohe and the surrounding areas to connect between high frequency trains and buses with a new, fully integrated bus and train interchange. Overall satisfaction with public transport services (86%) for the 12 months to December 2016 is up 3% compared to the same period last year. Train has the biggest increase with 89.6% satisfaction (up 6.3% compared to last year). High performing attributes with strong influence in train’s overall satisfaction increase include comfort and safety during trip, the ease of getting on/off the train, the vehicle overall and friendliness and helpfulness of the staff. Auckland ferries reached a major milestone. Reaching six million passenger trips for the 12-months to November 2016, which has not been achieved since the Auckland Harbour Bridge opened in 1959. AT Metro launched 99 cent Child Weekend Fares. It’s much easier and cheaper to get around Auckland at the weekend. AT encourages young people getting out and about on the weekend and using public transport with their parents or guardians.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 3 of 25 School bus information was made available on AT’s public information system. Teachers, parents and students can now view progress of the next arriving school bus at stops with passenger information displays, look up their school buses in Journey Planner or use Track my Bus to monitor its arrival. Financial Performance Deficit from operations (excludes funding for capital items) was $148.2 million, $12.9 million favourable to budget. Full year deficit is expected to be in line with budget. Full year revenue from public transport and infringements is expected to be behind budget by the end of the year. However, this will be offset by higher than budgeted Transport Agency operating funding and revenue from other sources such as rental income. Capital expenditure excluding vested assets was $305.7 million against a budget of $339.7 million. Forecasted full year capital spend is $737 million, $27 million lower than budget. This represents delivery of 96.5% of the funded programme. The major item within the budget shortfall relates to the Special Housing Areas programme which reported a $30 million deferral due to delays with the Regional Growth Fund decisions. Capital funding from both AC and the NZ Transport Agency is below budget due to the year to date underspend. Although the full year capital spend is expected to be lower than budget, a funding shortfall for core projects (non-ring fenced projects) amounting to $41 million exists. AT is exploring options to address this shortfall with the Transport Agency. Non-Financial Performance There are 34 non-financial performance measures covered by the Statement of Intent (SOI). Of the 34, 6 are on target to exceed the performance measure, 12 are on target to meet the performance measure, 8 are not on target to meet the performance measure, and 8 are annual measures. Highlights in terms of performance are: 88% of customer service requests relating to roads and footpaths received a response within AT’s specified timeframes (Target: 85%) The number of cycling trips in designated areas in Auckland from July to November 2016 is exceeding expectation (54% of the annual target has been achieved in the first five months) Arterial road productivity is above target (12 months rolling average of 59% compared to target of 55%) Performance not on target to meet performance measures are: Residents satisfaction with the quality of roads and footpaths in the Auckland region. Residents satisfaction for the 12 months to December 2016 has decreased by 3% compared to same period last year. While technical measures of footpath condition are satisfactory public perception is driven by other factors. Lower resident satisfaction with the quality of roads is affected by the disruptions caused by some construction happening around Auckland (e.g. Watercare’s Hunua 4 programme is causing disruptions around the One Tree Hill area and towards Mt Roskill, CRL project, works associated with SH20, Point Chevalier interchange and remodelling of SH16 near St Lukes). Lower resident satisfaction with the quality of footpaths is impacted by the ultra fast broadband project and general development works when footpaths are closed off or restricted. AT is actively monitoring and rectifying disruption on these sites and seeking alternative arrangements, in the case of footpaths where practical.
Travel times on five key routes are not on target to meet performance measures. The travel times were impacted by intersection signal loop faults (which have now
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 4 of 25 been repaired) and congestion in the shoulder peaks. Signal optimisation has been undertaken and a local network review will also be conducted to investigate further improvements on the routes. Annual cycle movements in the Auckland city centre. Cycle movement growth is curtailed due to the delivery of the network being behind schedule in particular, the outer city loop is not yet completed. This is now forecast to be completed in June 2017 and is expected to have a positive effect on cycle movements. New cycleways are proving popular. Risk Management Key risks are monitored and reported to the Finance and Risk Committee regularly. No risks have been identified that are of a senior management or governance level that could impact on the well-being or reputation of the Auckland Council Group, other than macro issues such as ‘congestion levels’. These will require a long term focus if measurable improvement is expected in this KPI. ATAP is a significant step in addressing this, once funded.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 5 of 25 2. Strategic issues and focus areas In line with our strategic themes, AT has progressed the following projects over the quarter to 31 December 2016:
Strategic themes: - Prioritise rapid, high frequency public transport - Transform and elevate customer experience - Build network optimisation and resilience - Ensure sustainable funding model - Develop creative, adaptive, innovative implementation
City Rail Link – The Council and Central Government have signed a “Heads of Agreement” committing to enter into a process to fund and govern the project throughout the remainder of the project lifecycle. The result of this will be the project being delivered via a special purpose vehicle known as “City Rail Link Limited” (CRLL). AC and the Government have appointed Sir. Brian Roche as the establishment chair of CRLL. Work is underway on the Precinct Downtown site and up Albert Street and the new entrance way to Britomart Station was completed over Christmas. Procurement documentation is ready for the stations eight tunnels prequalification., the Mt Eden site request for tender and the tunnel expression of interest. Electric Trains – All 57 electric trains have now achieved contract final acceptance and the Fleet Acceptance Certificate has been issued to the supplier. Final acceptance is confirmed once each unit has travelled 30,000km on the Auckland network. AMETI – The AMETI programme is progressing towards the revised target completion date of 2025 (busway fully operational) following approval of a joint Transport Agency/AT/AC delivery strategy and confirmation of priority (but not funding) through the Auckland Transport Alignment Project. Significant progress has been made in regards to a mitigation agreement with Nagti Paoa to provide access and support for the construction of the Panmure to Pakuranga Busway. North West Transformation – Auckland Council is preparing a Whenuapai structure plan in consultation with the TFUG (Transport for Future Urban Growth) study team. The structure plan, which is expected to be released early in 2017, will outline the changes/additions required to the existing roading network to support the development that will be occurring in the area bounded by State Highways 16 and 18 and the Upper Harbour coastline. The North West Transformation programme of works is also being reviewed as part of the TFUG study. It is likely that the study will result in changes to previously identified projects and will also identify additional projects that are needed to support development in the North West. Ōtāhuhu Bus/Rail Interchange – Main works were completed for a public opening on 31 October. There has been a significant increase in usage since opening. The addition of electronic ticket gates separating the rail platforms will happen in April 2017 following arrival of the gates from Europe. Manukau Bus/Rail Interchange – The construction tender was awarded to NZ Strong. Construction works are progressing well and to schedule, with civil and piling works predominating. This new interchange is needed to ensure that the AT Metro New Network operates effectively and to provide seamless interchange between bus to bus and bus to rail.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 6 of 25 Public Transport Safety Security and Amenity – Ticket gating of six stations is currently in the design phase. Stations to be gated are Henderson, Manurewa, Middlemore, Papatoetoe, Glen Innes and Papakura. Gating of most of these stations will be complete by end this financial year dependant on the delivery of the gates which, are expected to arrive in May 2017. Walking & Cycling major projects ‐ Glen Innes/Tamaki Shared Path – Section 1 from Merton Road to St Johns Road was completed in December 2016. The official opening date was 9 December 2016 with attendance by the Transport Minister and the Mayor. Section 2 alignment is confirmed with structure design for the rail bridges and retaining walls commenced. The construction of Section 3 has commenced. ‐ Mt Roskill Cycle Route – Construction was completed on 9 November 2016 and officially opened by the Transport Minister and the Mayor on 23 November 2016. The opening ceremony was held at the Mount Roskill War Memorial Park, Mt Roskill. The project was completed four weeks ahead of schedule and on budget. ‐ Waterview Shared Path – The detailed design for the major structures and retaining walls have been completed. The project will open in three stages projected for end February and early May 2017. ‐ K-Road Cycle Route – The public consultation period closed on 20 November 2016; approximately 1600 submissions are being analysed. Travel planning initiatives ‐ Travelwise and Safer Communities – AT promoted safe walking and cycling through school crossing trainings, park and walk events, promotions at assembly, student-led events and road-safety focused promotions such as Slow Down Around Schools events. To foster new travel habits, a new initiative promoted mode shift over a one to two week period through stickers and the opportunity to win a lunch or iceblock reward. Six schools utilised the active rewards cards to promote and reward sustained behaviour change this quarter. Teachers and student leaders play a key role in designing, promoting and supporting road safety initiatives as part of Auckland Transport’s Travelwise programme. Of the 300 Auckland schools in the Travelwise programme, 62 were awarded gold, 73 silver and 96 bronze at the annual celebration event. 441 students accompanied by 118 adults from 72 schools attended the celebration event. Phil Goff, David Warburton and other AT staff were there to help encourage and support student and teachers in their work towards road safety and active transport. The event had the support of the Maritime Museum, Panuku Development Auckland, KiwiRail and the NZ Police School Community Officers. ‐ Rural schools – This quarter has focused on continuing to build engagement for the rural schools programme. A number of training sessions about safe walking and bus safety on rural roads were held. A key promotional event for the programme was the Wellsford school Agricultural day. A Big Rig truck was booked to attend the day in order to highlight blind spots and give people a first-hand experience of what can be seen from the driver’s seat of a large truck. Information about child restraints were also provided to people attending the day. ‐ Workplaces and Tertiary – The Travelwise Choices programme continued engaging with new and existing organisations to reduce single occupancy
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 7 of 25 vehicle (SOV) use. Thirty events across the Auckland region were held which engaged over 1500 people. The focus was mainly on central city workplaces and the Waitemata and Counties Manukau District Health Boards.
Route optimisation ‐ Active monitoring and traffic signal optimisation of the city centre network has been carried out via ATOC Central. A continuous monitoring approach has been adopted meaning AT now monitors and optimises the whole city centre network each month rather than targeting specific areas each quarter. The network performance measures still indicate that all the key elements of the transport network remain within the acceptable levels despite the extensive construction works underway. Particular emphasis was given during the December period catering for the high pedestrian demands during holiday seasons. ‐ Traffic signal network monitoring has taken place from ATOC Smales, with particular focus on the monitoring and optimising of the key corridors. A significant focus has also been apportioned to fixing issues with faulty vehicle detector loops, which has surfaced as an issue over the current and last quarter. Faulty detector loops reduce the intelligence of AT’s traffic signals rendering them far less efficient. ‐ The Whangaparaoa Road Dynamic Lane project is on track for implementation in 2017. The AT working group and the Transport Agency have agreed a layout for the dynamic lanes after analysing a number of potential options and the working group is now progressing with consultation and preparation for detail design and procurement. ‐ Work has continued on the Queenstown Road roundabout metering project, which aims to ease congestion for southbound traffic on Queenstown Road. Priority has been given to this project as it is a key part of the primary CBD to airport route. Consultation is now complete and design finalised. AT has been working closely with the Transport Agency and AMA to coordinate the physical construction works. Completion of construction is anticipated in February. Health and Safety ‐ A critical risk and hazard management programme is underway. AT’s most critical risks, called our Top Line Risks, have been agreed to twelve risks. A pilot Bowtie/Control Plan was developed on the subject of violence. ‐ AT achieved tertiary status on the Workplace Safety Management Practices audit conducted in October. ‐ Customer Services hand-book: AT Metro have developed a handbook for their customer service centre staff. The handbook contains a large amount of health and safety information required for the staff to carry out their roles. This includes dealing with emergencies, security and dealing with violence or abuse. Key People Deliverables ‐ People pulse survey – AT completed the second quarterly pulse engagement survey for staff in October with 864 respondents. While the survey results showed that the overall level of engagement decreased slightly in October (52% to 51%), we are still within the 'Moderate' zone of Aon Hewitt’s engagement benchmark.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 8 of 25 ‐ Authentic leadership programme – 18 participants went through the Authentic leadership programme which finished on the first week of December with presentations to the participants’ Executive Leadership Team. Participants feedback was that this course was very insightful and have given them an altered view of themselves, the way they operate and what it means to be an authentic leader. We are already seeing leaders at Auckland Transport using their discoveries and insights to perform better.
3. Highlights for the last quarter
New Network in South Auckland – AT rolled out the Southern New Network on Sunday 30 October 2016. This means new bus routes, new bus numbers, new timetables and new information at bus stops. Some people will need to connect with another bus or train to complete their journey. Benefits of the New Network include: ‐ Simpler – a simpler network makes public transport a more attractive and easier option for a wider range of activities, as well as new or one-off trips. ‐ Frequent – more buses are running more frequently throughout the day, 7am – 7pm, 7 days a week. Buses are operating outside the hours 7am to 7pm, but at reduced frequencies. ‐ Choice – with new Simple Fares introduced in August, public transport users are able to take advantage of connecting to more destinations. Public Transport ‐ Bus capacity was increased on central corridors ‐ Rail capacity was increased. Reduced dwell times at Papakura has released an additional three-car unit for peak services. Ōtāhuhu Bus Interchange – Auckland’s newest transport centre at Ōtāhuhu Station opened on 29 October 2016. The station is at the heart of the Southern New Network. Features of the new interchange include: ‐ high quality, modern facility, with architecture reflecting local and historical narratives ‐ covered bus platforms for passengers moving between bus and train services ‐ improved facilities and access for cyclists and pedestrians ‐ clear, safe separation of buses, trains, pedestrians, cyclists and other vehicles. Albany Highway North upgrade – This is a key route on the North Shore. The work includes the widening of the highway to four lanes – two for general traffic and two T2 transit lanes for buses and vehicles carrying two or more people. The transit lanes will make using public transport a more attractive prospect, particularly for students and commuters, by improving morning and afternoon peak travel times. Pedestrians and cyclists can now enjoy on and off road cycle facilities and a wider footpath in both directions. Segregated pedestrian footpaths and cycle paths have been constructed where practicable, with a shared path otherwise provided. It is hoped that these additions will make cycling and walking a more attractive and safer prospect for local residents, students and commuters who use the highway each day. Mt Roskill Safe Route – This is a new cycling and walking route connecting Mt Roskill with the Manukau Harbour and will provide greater travel options for locals. It includes shared paths for people to walk or cycle on, signalised crossings and traffic calming measures such as speed tables. The route is part of a growing network of
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 9 of 25 cycleways throughout Auckland and part of the Puketapapa Local Board Greenways initiative. It connects with the shared path that runs along State Highway 20 to key employment areas in Onehunga and the airport. Managing Auckland’s infrastructure – 180kms of road resealing, 11kms of rehabilitation and 40kms of footpath renewals have been completed this year. Paying for Parking – An AT Park phone app was successfully trialled Sustainability – A sustainability framework was agreed and followed up with work on EV charging infrastructure and energy savings
4. Future outlook
Housing Infrastructure Fund – Indicative funding applications will be considered by the Crown. Work will continue to ensure AT and AC optimise Government funding for these key infrastructure projects. Rail Network – Trials of the Customer Information LCD screens are continuing; a proof of concept report has been prepared for circulation and quotations received for an upgrade of the screens to 21 inch together with re-orientation. CRL – Tendering will begin on significant contracts. Britomart Station will open the new eastern entrance. Work will continue on existing Albert Street and Downtown sites. AMETI - Notice of Requirement (NOR) will be notified for Stage 2A (busway between Panmure and Pakuranga) with accompanying public open days. Design, consenting and property acquisition activities for future stages. Completion of scheme assessment updates for Stage 2B (Pakuranga to Botany including Reeves Road) and procurement for the following design and consenting stages. Manukau Bus/Rail Interchange – Continuation of construction. AT is anticipating the main works complete by end February 2018, which will be followed by IT-focussed fitout of the facility. The new station is expected to be open to the public in mid-2018. Public Transport Safety Security & Amenity – Design continuation for Henderson, Middlemore, Manurewa, Papatoetoe and Papakura stations. Glen Innes station meetings with Local Board and other stakeholders to discuss the gating project and opportunities for related access enhancements. Pukekohe Station Upgrade Stage 1 – Defects list (Snagging) works to be completed and defects period commenced. Pukekohe Station Upgrade Stage 2 - Tender for remaining works and award. Completion of interchange by late 2017. East West Bus Network – Stage 1 works on Avenue Road to be completed by February 2017. Completion of the detailed design and the beginning of construction for the Stage 2 Early Works is planned for mid-2017. Detailed design for Stage 3 Remaining works is planned to begin in late 2017. The construction of the Stage 3 Orly Ave & Thomas Rd cycle lanes is to be brought forward to early 2017. Consultation over Pt Chevalier/Herne Bay cycleway, Tamaki Drive, Karangahape Road upgrade and the Quay Street cycleway extension Support for World Masters Games
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 10 of 25 5. Key deliverables
Progress for Key Projects/Activities from Last Quarter
Key project/activity Status Comments Electric Trains In 12 electric trains received final contractual Closure acceptance. The trial Customer LCD Screens are fitted. AMETI Stage 2A Ongoing Notice of Requirement lodged, to be notified by March 2017. AMETI Stage 2B Ongoing Procurement of design and consenting stages underway, tender to be advertised second quarter of 2017. Manukau Bus/Rail Ongoing Award of the main construction contract to Interchange NZ Strong in October 2016. Construction underway and progressing to schedule. Pukekohe Station Ongoing Tender plan for remaining works to be Upgrade approved and tender issued. Final building consent for stage 2 works to be processed. Stage 1 works completed and opened for operational use. Stage 2 piling works commenced onsite successfully utilising Christmas rail block of line. East West Bus Network Ongoing Detailed design for the Stage 1 Early (Early work packages) Works has been completed. Construction began mid-September, and will be completed by February 2017 Double Decker Buses Ongoing Budget was approved in October 2016. (Dominion Road) Initial workshop with Dominion Road Upgrade Team and MRT team to define clear scope of work completed. Analysis and scoping done. Double Decker Buses Ongoing Scope confirmed for trees along for Great North and Onewa Route. Introduced double decker bus to Kaipatiki Local Board. Lodged resource consent and building consent applications for Onewa Route. Veranda inspection for Onewa Route completed. Takatu Road Seal Ongoing Takatu Stage 1 construction completed. Extension Takatu Stages 2 & 3 construction programmed to begin November 2016 and completed 7th July 2017. Silver Hill Road Seal Ongoing Silver Hill construction completed Extension December 2016.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 11 of 25 Monowai Road Seal Ongoing Monowai design 53% complete. Extension Planned Progress on Key Projects/Activities for Next Quarter
Key project/activity Comments CRL Release of Expressions of Interest for Linewide systems contract. Construction Commencing in CPO to establish CRL tunnels. AMETI Stage 2A Notice of Requirement to be notified with public open days and communications. AMETI Stage 2B Approve scheme updates, finalise tender documentation for design and consenting stage. AMETI Sylvia Park Approve revised scheme, commence preliminary and detailed design. Manukau Bus/Rail Continuation of predominantly civil works (piling, sand Interchange drains, foundations, etc.) and procurement of long-lead structural items in preparation to beginning the construction of the building/structural elements. Main works construction continuing until end February 2018, to be followed by IT fitout of the facility. PT Safety Security & Completion of gating canopy design. Minor construction Amenity enabling works (service relocation, moving of electrical cabinets). Pukekohe Station Complete snagging for stage 1 works. Defects period Upgrade continues. Tender and award remainder of stage 2 works. Receive building consent for remainder of stage 2 works. Start works onsite for park and ride and bus station. East West Bus Complete Stage 1 construction in Mangere and Otahuhu Network (Early work by February. packages) Complete Stage 2 detailed design by early 2017. Begin Stage 2 construction in mid-2017. Construction of Orly Ave & Thomas Rd cycle lanes to begin early 2017. Double Decker Buses Design workshop with Dom Road Upgrade Team and MRT (Dominion Road) Team once preliminary design is finalised. Reinvestigate veranda conditions along the route. Transport Agency funding application Double Decker Buses Optioneering exercise and gain endorsement from project sponsors for Great North Route. Also lodge resource and building consents for this route. To undertake veranda modifications and tree pruning followed by a trial run for Onewa Route To confirm scope for Karangahape Road along Great North Route. Monowai Road Seal Monowai preliminary and detailed design to be completed Extension March 2017.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 12 of 25 6. Financial performance
The following criteria has been used to rate the financial performance for this report: Key Criteria
Target met or exceeded (100%+)
Target substantially achieved (97.5%-99.9%)
Target not achieved (0%-97.4%)
Full Budget $’m Actual Variance Comment year to date budget Operational
Higher NZ Transport Agency operating funding due to a one-off $2.7 million of unbudgeted revenue. Revenue/ This relates to FY2015/16 External 249.2 251.7 admin subsidy, where AT 510.7 funding was able to claim for administration and corporate overheads at a higher rate than planned.
AC funding 130.1 130.1 260.2 Expenditure excluding 371.4 368.7 765.5 depreciation, amortisation Depreciation and 169.0 161.3 338.0 amortisation Gain (loss) on derivatives and - 1.8 (0.8) disposal of assets
Full year $’m Budget ActualVariance Comment budget
Capital
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 13 of 25 Underspend mainly due to: Special Housing Areas programme below budget as a result of delays of Regional Growth Fund decisions Local Board Initiatives Expenditure projects as a result of excluding 339.7 305.7 764.6 delays in obtaining vested asset consents and change of project scope This underspend is partly offset by higher than budget spend in CRL due to accelerated construction works. Roading vested assets Vested asset 50.8 62.4 received from AC higher than 101.5 expenditure expected. Vested asset 50.8 62.4 See explanation above. 101.5 revenue AC funding – Lower AC funding as a result 242.4 224.8 548.0 subsidy of lower capital expenditure. Lower NZ Transport Agency External funding 97.3 80.9 funding as a result of lower 216.6 capital expenditure.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 14 of 25 7. Performance measures
The following criteria has been used to rate the performance for this report: Key Criteria
On target to exceed performance measure (more than 2.5% above
target) On target to meet performance measure (within +/- 2.5% of target) Not on target to meet performance measure (more than 2.5% below
target)
Date of On Performance measure SOI Target Last actual last track measure
Strategic Theme - Prioritise rapid, high frequency public transport
1. Total public transport December 88.97 84.7 boardings (millions) 2016
2. Total rail boardings December 19.5 18.1 (millions) 2016
3. Boardings on rapid or Increase at 8.5% growth frequent network (rail, faster rate compared to December
busway, Frequent Transit than total 3.9% total 2016 Network - bus) boardings boarding growth
Strategic Theme - Transform and elevate customer focus and experience
4. Public transport punctuality
YTD average: December (weighted average across 93% 95.1% 2016 all modes)
5. Customer satisfaction December December 84% index: Public transport result: 86% 2016
6. Customer satisfaction December December 70% index: Road quality result: 66% 2016
7. Customer satisfaction December December 65% index: Footpath quality result: 61% 2016
8. Customer satisfaction December December 60-65% index: Road safety result: 66% 2016
9. Local road deaths and serious injuries per 100 5 Annual measure million vehicle kilometres travelled1
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 15 of 25 Date of On Performance measure SOI Target Last actual last track measure
10. Change from the previous financial year in the number Reduce by at 12 month rolling of fatalities and serious least 9 total to July July 2016 injury crashes on the local (End of year 2016: 533 road network, expressed as target: 528) a number
11. Percentage of customer service requests relating to 12 month rolling October roads and footpaths which 85% average: 88% 2016 receive a response within specified time frames2
Strategic Theme - Build network optimisation and resilience
55% of the 12 month rolling November 12. Arterial road productivity3 ideal average: 59% 2016 achieved
Travel times (in minutes) on key freight routes4
(performance measures 13 to 22)
13. SEART (from Sylvia Park to November 11 13 East Tamaki) – East Bound 2016
14. SEART (from East Tamaki November to Sylvia Park) – West 12 10 2016 Bound
15. Wairau Rd (from SH1 to November 8 8 SH18) - West Bound 2016
16. Wairau Rd (from SH18 to November 8 9 SH1) - East Bound 2016
17. Harris Rd (from East November Tamaki to SH1 Highbrook 10 10 2016 interchange) – West Bound
18. Harris Rd (from SH1 November Highbrook interchange to 11 12 2016 East Tamaki) – East Bound
19. Kaka St/James Fletcher Dr/Favona Rd/Walmsley Rd November 13 8 (SH20 to Walmsley) – East 2016 Bound
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 16 of 25 Date of On Performance measure SOI Target Last actual last track measure
20. Kaka St/James Fletcher Dr/Favona Rd/Walmsley Rd November 13 7 (Walmsley to SH20) – West 2016 Bound
21. Great South Rd (SH1 Ellerslie Panmure Highway November 11 12 Interchange to Portage Rd) 2016 – South Bound
22. Great South Rd (Portage Rd to SH1 Ellerslie November 11 12 Panmure Highway 2016 Interchange) – North Bound
23. New cycleways added to YTD completion: December 16.4 km regional cycle network (km) 5.2 km 2016
24. Annual number of cycling YTD completion: November trips in designated areas in 1.2 million 648,509 2016 Auckland (all day)
25. Annual cycle movements in YTD completion: November 1,847,000 the Auckland city centre 655,527 2016
26. Road maintenance standards (ride quality) as measured by Smooth 82% Annual measure Travel Exposure (STE) for all urban roads
27. Road maintenance standards (ride quality) as measured by Smooth 92% Annual measure Travel Exposure (STE) for all rural roads
28. Percentage of the sealed local road network that is 8% Annual measure resurfaced
29. Percentage of footpaths in Annual measure acceptable condition (as 99% defined in AT’s AMP)
Strategic Theme - Ensure a sustainable funding model
November November 30. PT farebox recovery5 47-50% result: 47.8% 2016
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 17 of 25 Date of On Performance measure SOI Target Last actual last track measure
Strategic Theme - Develop creative, adaptive, innovative implementation
November 12 31. Parking occupancy rates November 70%-90% month rolling (peak four-hour, on-street) 6 2016 average: 86.8%
32. Number of car trips avoided through travel planning 18,400 Annual measure initiatives7
33. Active and sustainable transport mode share at schools where the 40% Annual measure Travelwise programme is implemented
34. Active and sustainable transport mode share for morning peak commuters 40% Annual measure where the Commute programme is implemented
1 The rate of local road deaths and serious injuries per 100 million vehicle kilometres travelled is an estimate exposure to crash-risk on the local road network. 2 As defined in AT’s customer service standards: two days for incident investigation as a high priority; three days for an incident investigation as a normal priority; one-hour emergency response time. 3 Road productivity is a measure of the efficiency of the road in moving people during the peak hour. It is measured as the product of number of vehicles, their average journey speed and average vehicular occupancy. Key arterial routes include: - Airport to CBD (via Manukau Road) - St Lukes to St Johns (via Balmoral/Greenlane West/Greenlane East/Remuera Road) - Albany to Birkenhead (via Glenfield Road) - Henderson to CBD (via Great North Road) - SH1 to Ti Rakau Drive (via Te Irirangi Drive) - SH20 to Portage Road (via Tiverton/Wolverton Road) 4 Maintain travel times for the 85th percentile of trips along each route. 5 Farebox recovery measures the contribution passenger fares make to the operating cost of providing public transport services. The measure calculates farebox recovery in accordance with Transport Agency guidelines. 6 Four-hour peak period is defined as the top four busiest hours of the day. These hours are not often coincidental and can vary depending on contributing factors. On-street parking occupancy is surveyed once a quarter in three central city parking zone precincts: Shortland/High Streets, Karangahape Road and Wynyard Quarter.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 18 of 25 7 This measure considers the results achieved by AT’s Travelwise for schools and commute programmes, and is calculated as follows: - Travelwise – travel modes to school is tested among Travelwise schools annually via survey, and is compared to baseline results (excluding car/walk 400m+) - Commute – calculation of the number of trips converted from drive-alone to other modes amongst Commute programme participants.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 19 of 25 8. Contribution to Māori outcomes
AT is contributing to Te Toa Takitini AC’s Māori transformational shift programme, designed to improve Māori wellbeing across Tāmaki Makaurau (Auckland). This includes giving effect to kaitiakitanga, marae development and papakainga development in Whai Tiaki (cultural wellbeing). Contributions are also being made to Whai Painga (social wellbeing) including the road safety programme and the Māori Wardens.
AT’s SOI 2016/17-2018/19 demonstrates its commitment to Māori responsiveness. AT will continue to engage with mana whenua on major transport infrastructure projects using Te Aranga Māori urban design principles, including te reo Māori and signage, and utilising AT’s Māori Engagement Framework (which includes Māori Value assessments (MVAs)) across the following activity classes.
Jul-Dec Activity classes 2016 How it contributes to Māori outcomes / Progress Spend $ Roads and footpaths Unveiling of mana whenua signs at Te Waipuna a Rangiatea (Van Dammes Lagoon) in December. Stage 2A documentation prepared for geotechnical authority conditions in preparation for exploratory AMETI 37,700 works. A cultural heritage and archaeological management plan is being prepared. Two mana whenua representatives involved in Stage 2B multi criteria assessment workshops. Ongoing engagement has occurred with mana whenua on the Tāmaki Drive and Ngapipi Road intersection upgrade. This includes discussions on reclamation and mitigation measures. Ngāti Whātua o Ōrākei and Ngai Tai have submitted MVAs. Next step is for the project to provide a response to issues raised in the MVAs. Engagement has also occurred on other projects such as Monowai and Takitu road seal extensions, Murphy’s Road and Birkenhead Main Street Roads and upgrade. Footpaths 14,200 Hingaia/Papaia are legacy projects and (general) engagement has recently commenced with mana whenua, who have identified and reconfirmed their interest. Present focus is input into stormwater design including rain garden. Ōtāhuhu Streetscape upgrade has commenced, and a site visit undertaken with 4 mana whenua groups. Mana whenua expressed theme consistency to reflect other projects in the Ōtāhuhu area. Recent discussions with mana whenua on the approval process for selecting iwi design input and artist/s.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 20 of 25 Jul-Dec Activity classes 2016 How it contributes to Māori outcomes / Progress Spend $ Mana whenua suggested Māori names for the new road at Long Bay. This included Te Ara Piki Kaka Road, Maramatanga Road and Hiringa Huanui Road. Following assessment against the road Glenvar Ridge naming criteria, and engagement with the 5,900 Road community and the Hibiscus and Bays Local Board, Glenvar Ridge Road was chosen by the Board as the new road name. A Ngāti Maru artist has been chosen to design the pou for the roundabout and retaining wall design. Regular hui are being held with mana whenua for Glen Innes to Tāmaki Drive. Opening ceremony was held for section 1 and a dawn karakia was provided by mana whenua in December. Discussions commenced on route options for section 3 across Hobson Bay. New Lynn to Waterview a Māori arborist to be selected to assist in plant species selection.
Walking & Cycling 13,400 Ngai Tai artist to develop content for the Whau River Shared Path Bridge interpretative signage. Nominations for interpretative signage including narrative on Waitakere Ranges and Māori names for the Whau River shared path to be considered by mana whenua collective. The walking and cycling programme was the subject of several hui with mana whenua. Engagement on cycleway projects including Tāmaki Drive, Quay Street, Glover Road and Ian McKinnon Drive. Public Transport/ Other Public Transport Infrastructure Sustainability Council of Australia (ISCA) are making amendments to their technical manual to incorporate the changes proposed by the mana whenua forum and the forum has chosen seven further ISCA credits to amend from a cultural perspective making 19 credits in total. Priority credits have also been established for upcoming contract. A social development advisor has been appointed to City Rail Link 32,600 identify sustainable employment opportunities for Mana Whenua, Māori, Pasifika and youth. Mana whenua provided a cultural induction for the contractors on the Britomart worksites and they continue to exercise kaitiakitanga through their input into ongoing consent conditions and the monitoring of worksites. A briefing for iwi chairs was held to update them on project progress and upcoming procurement and development opportunities.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 21 of 25 Jul-Dec Activity classes 2016 How it contributes to Māori outcomes / Progress Spend $ Station opened in December with dawn blessing led by mana whenua and attendance and participation at the official opening. Ōtāhuhu Station design was heavily influenced by mana whenua through Te Ōtāhuhu Station 9,200 Aranga Māori Design principles application. A video on the Māori design aspects of the station is being developed and will be shown on the screens at the station. Māori Wardens provide a customer service role on some train services particularly in the evenings, and Māori Wardens 239,300 for special events. This is met through a contract between AT and TransDev Expression of Interest for Te Aranga Māori Urban Design lead for Half Moon Bay completed in July, mana whenua collective endorsed a Ngai Tai designer to complete these works. Further engagement on design with artist in December. Public Transport 6,400 Mana whenua were provided an update by the project teams on the Newmarket Level crossing and Manukau bus interchange in December. Cultural support provided by Ngāti Te Ata and Ngāti Tamaoho for sod turning for Pukekohe station.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 22 of 25 Jul-Dec Activity classes 2016 How it contributes to Māori outcomes / Progress Spend $ Other Learner licence training courses for rangatahi (Māori youth) have been held at Tahuna Pā (Waiuku), Hoani Waititi and Manurewa marae. While the courses were well attended, the cost of sitting the licence remains a significant barrier. The Mentoring programme, which assists rangatahi Māori in obtaining their restricted licence, has been held at Ōrākei marae and in the South Kaipara. Mentors are members of the local community, Police and the Road Safety and 21,200 AA, with a sponsored car from Moyes Panmure. Community Seven participants in the South Kaipara programme Transport passed their restricted license, with one more to sit. Challenges for participants are time and commitment. Site visits have also been carried out to Umupuia marae for speed reduction and a ‘Love Being a Local’ education campaign. Events for promoting driver licensing include the Women in Trades conference and planning for an activation at Te Herenga Waka festival in January 2017. Design is complete for Kia Ora marae and AT is waiting on final approval from the marae to the plans before construction can begin. Transport Agency approval process is nearing completion. Construction is to occur prior to the end of the financial year. This includes $20K for internal staff time and the balance for professional services. Marae turnout 24,400 project Initial engagement has occurred with Umupuia marae on the design improvements for the turnout onto the main road at Maraetai. AT will be engaging with marae representatives to identity a design response and once this is complete timeframes/staging and costs for construction will be able to be identified. Design elements will be undertaken internally. A draft Māori Responsiveness Project Plan was developed for AT. Presently recruiting for a Māori Responsiveness Programme Manager to lead the programme of work across AT.
Communications 21,100 A best practice Māori Engagement video is being developed that promotes good Māori engagement across AT. The video uses the engagement process with mana whenua for the design and construction of Ōtāhuhu Station and Te Aranga Māori Design application as the exemplar model.
Other 8,500 The Transport for Future Urban Growth (TFUG) project has been engaging on a regional basis with
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 23 of 25 Jul-Dec Activity classes 2016 How it contributes to Māori outcomes / Progress Spend $ mana whenua since early 2016, to determine decision-making criteria for mana whenua values and long and short list options in growth areas throughout Auckland. High level discussions with mana whenua on AT’s sustainability framework and the Roads and Streets Framework and Transport Design Manual occurred in October/November. Technical workshops on the frameworks will be underway in early 2017 to ensure mana whenua input into content. AT has been working with the 19 tribes of Tāmaki Makaurau on a regional signage project that celebrates mana whenua’s cultural tradition and stories, including a regional tohu or logo Unaunahi (fish scales). The first regional sign for Ngāti Paoa was installed in Fanshawe Street in October. TOTAL $433,900
9. Key Local Board issues
Workshops were held with 16 individual Local Boards in the past quarter following the election. AT presented its forward works programme for their areas for the coming 12 months. Formal induction of Local Boards was not scheduled until February therefore AT initiated a presentation for Chairs, deputies and transport leads covering high level strategic issues such as growth and funding pressures. The presentation, by AT’s Chief Executive also included key region-wide projects. Local Board capital projects continue to progress well. The Matakana foot bridge was completed as was the Mount Albert pedestrian overbridge which links the rail platform with the town centre. The wharf structure at Half Moon Bay was readied for completion over the Christmas period. The pedestrian rail station overbridge at Manurewa was also near completion. There are currently 72 live projects in the Local Board programme and the spend to end of December was $10.5 million which is ahead of budgeted delivery for the full year. In recognition of role of Local Boards, the AT Board appointed Mark Gilbert to have high level oversight of Local Board relationships and key programmes.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 24 of 25 10. Risk Management
Progress on current internal and external audit issues Internal audit In the first quarter of the 2016/2017 year, Risk & Assurance undertook a risk profiling exercise with senior management which resulted in the identification of what senior management considered to be AT’s “Top 12” risks. These key risks were across a number of areas including strategy, finance, procurement, major project delivery, technology and cybersecurity and health and safety. During the quarter under review, Risk & Assurance has continued to work with senior management to monitor and assess the Top 12 risks for changes in trends, impact, likelihood of occurrence and relevant mitigating controls. A formal program to perform an in-depth analysis of each of these risks over a 12 month rolling period, has been developed. Under the program 3 of the Top 12 risks will be analysed each quarter in detail by senior management in order to provide the ELT Risk Committee and the Finance and Risk Committee with detailed information relating to each risk so as to enable better understanding, assessment and monitoring of these risks. During the period under review this activity was completed for 3 of the key risks. Risk & Assurance will undertake various process improvement activities relating to risk management including an update of AT’s Risk Management Framework, review of AT Polices, risk appetite statements and development and introduction of the Bowtie methodology for assessment of key risks. Fraud and corruption awareness training will also be carried out across the organisation. The 2016/2017 internal audit work plan was updated to include additional reviews in higher risk areas such as cybersecurity, technology and health and safety. The amendments were made as a result of the risk profiling exercise carried out with senior management and the plan was approved by the Finance and Risk Committee at its November 2016 meeting. Delivery of the plan is on track with several audits in key areas such as cyber security and health and safety currently in progress. A number of special investigations (i.e. unplanned work) are also in progress or have been completed. Risk & Assurance also continued to provide probity audit and advisory services on high value procurements or those deemed to be high risk in line with AT’ s Procurement Strategy. External audit Audit NZ is currently engaged to perform a review engagement on the reporting pack to be submitted to Auckland Council on 27 January 2017. In addition to that, the audit team is also completing the interim audit work for the year ending 30 June 2017. This involves testing key controls within the organisation as well as process walkthroughs and updating documentations. No significant issues have been identified at this stage. The results of the review engagement will be presented to the Committee in the 16 May 2017 meeting. Group financial impacts AT is unaware of any financial impacts that would affect the Auckland Council group. No changes have been made in the quarter (i.e. 31 December 2016 quarter) to the approaches taken to risk management, internal audit, or external audit.
Auckland Transport Quarterly Report – Quarter ended 31 December 2016 Page 25 of 25 Auckland Tourism, Events and Economic Development | 1
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Report to
Auckland Council
For the quarter ending 31 December 2016
Ovation of the Seas in the Waitematā Harbour Auckland Tourism, Events and Economic Development | 2
Document Title – odd page header | 2
He Mihi
The volcanic cones of Tāmaki Makaurau stand as E tu noa ana nga maunga whakahii i te riu o Tāmaki sheltering monoliths to the people from an ancient Makaurau. heritage who have kept the home fires burning as a E whakaruruhau ana i nga ahikaa mai tawhiti. symbol of remembrance of Mataoho whose rage created this beautiful landscape. E maumahara ana i te nguha a Mataoho. To those who have passed into the night, may you Ratou kua poto ki tua o te arai, e moe e okioki find eternal rest. Tatou te hunga ora e kawe ana i te aronganui mo te For those of us who have been left behind to build the pai me te whai rawa o Tāmaki, tena ra tatou katoa. most liveable city in the world, greetings to us all.
Aucklandnz.com/ateed
Auckland Tourism, Events and Economic Development | 3
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Contents
He Mihi ...... 1 1. Executive summary ...... 4 2. Strategic framework and focus areas...... 7 Strategic Issue: Accommodation Provider Targeted Rate ...... 9 3. Key deliverables and highlights for the last quarter ...... 11 4. Key deliverables and highlights for the next quarter ...... 23 5.Financial performance ...... 27 6. Performance measures ...... 28 7. Māori transformational shifts activities ...... 30 8. Key local board activity ...... 36 9. Risk management ...... 38
Aucklandnz.com/ateed
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1. Executive summary
The following table summarises key ATEED achievements during Quarter 2. These are listed by ATEED’s strategic pillars, as per ATEED’s Statement of Intent 2016-19.
Successful delivery of the Diwali Festival of Lights in partnership with the Asia New Zealand Foundation. ATEED also facilitated the ITM Auckland SuperSprint event, part of the 2016/17 Major Events Portfolio, and delivered ancillary events including a drive-in movie and Fan Day. These events are key to the delivery of Auckland’s major events strategy and make Auckland attractive to residents and visitors. Completion of the Lion Foundation Young Enterprise Scheme programme for the 2016 academic year, culminating in five Auckland schools winning seven Young Enterprise National Awards. Over 1000 Auckland students formed more than 200 companies during the year. This annual programme supports the culture of entrepreneurship developing in Auckland, as well as supporting young people on their journey into the world of work. ATEED facilitated the establishment of three multinationals. Two are in the construction sector and one is in the screen sector. The attraction of these companies will increase sector productivity through attraction of key businesses. The CBD Jobs and Skills Hub was launched in collaboration with local and central government, training agencies and employers. This is part of broader #BUILD AKL strategy focusing on getting 4000 back into work
Grow the visitor economy The contribution to regional GDP from major events invested in rose to $10.33 million at the end of Q21, and there are several more large-scale events on the way in the first half of 2017. Q2 was a significant period for the facilitation and delivery of major events, including the Auckland Diwali Festival, the Auckland Marathon, Taste of Auckland, the ITM Auckland SuperSprint, the Farmers Santa Parade, the Aon Youth Sailing World Championships, the Bledisloe Cup and the FINA World’s Youth Water Polo Championships. Key milestones for World Masters Games 2017 (WMG2017) in Q2 included the review and approval of the Leverage and Legacy programme. ATEED has continued to work closely with MBIE to agree on the objectives of the Leverage and Legacy programme, and a forum has been re-established to track progress. At the end of Q2, five sports (archery, football, hockey, golf and softball) within the WMG2017 programme had reached capacity and waiting lists were in operation. As has been the case for a number of months now, accommodation availability and pricing remains the biggest risk/issue to the organisation. The Auckland Convention Bureau has achieved an 86 per cent win ratio as at 31 December 2016, against a target of 60 per cent for the year. At the same point, 19 international bids have been supported with an estimated value of the business events won is $18 million, marginally below ATEED’s target for 2016/17 of $19m. Q3 will see the arrival of Hainan Airlines operating direct flights three times a week between Shenzhen and Auckland, as well as Qatar Airways operating Doha-Auckland flights from 1 February. The Doha-Auckland sector will be the world’s longest long-haul flight, and this increased capacity makes Auckland more accessible to leisure and business visitors.
ATEED will welcome the second group of China Cup Sailing school students in January, which is part of their New Zealand Winter Camp programme. ATEED’s partnership with New Zealand Bloodstock will be formalised in January, with the signing of a memorandum of understanding outlining future collaboration to attract high net worth individuals from Asia and the US.
Resource consent for the Queens Wharf mooring dolphin has been put on hold until the end of March. This will ensure that suitable interim cruise infrastructure is in place for larger ships such as Ovation of the Seas in the future.
1 This figure has been calculated completed evaluations of the following events: Pan Pacific Youth Water Polo Festival, New Zealand International Film Festival, New Zealand Fashion Week, Auckland on Water Boat Show, Auckland Diwali Festival, Bledisloe Cup, New Zealand Navy 75th Anniversary, Taste of Auckland, Auckland White Water Invitational, Farmers Santa Parade.
Aucklandnz.com/ateed
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Significant events for Q3 include the Tāmaki Herenga Waka Festival (Māori signature festival), celebrating the Māori heritage and culture of Tāmaki Makaurau. Others include the ASB Classic Tennis tournament, the Downer NRL Auckland Nines, and Pasifika and Lantern festivals. A reconstruction of Shakespeare’s Globe Theatre will also pop-up at Ellerslie Racecourse in February for two months.
During the period ATEED continued to support local tourism initiatives in local board areas. This included work with the Great Barrier Local Board to support an application being made by the Awana Rural Women’s group to establish a Dark Sky Sanctuary on the island, to preserve its scientific, natural, or educational value, its cultural heritage and/or public enjoyment. This initiative has the potential to attract visitors to the island. Additionally, ATEED worked with the Franklin Local Board to implement a Franklin-wide assessment of motor campervan and camping. This assessment will determine the need for new or upgraded facilities to encourage more visitors to stay overnight in the Franklin region.
Build a culture of innovation and entrepreneurship
The number of resident businesses at GridAKL has grown from 56 in Q1 to 76 at the end of Q2, which is above ATEED’s annual SOI KPI target of 55.
There were 383 businesses managed through the Regional Business Partner Network programme as at 31 December. This is 53 per cent of ATEED’s annual SOI KPI target of 720 for this activity.
ATEED continued to seek opportunities across Auckland's tertiary education sector to develop student entrepreneurs. Six out of the 10 student entrepreneurial initiatives funded through the Student Entrepreneurship Contestable fund finished in Q2. Nearly 800 students took part in the above-mentioned initiatives.
ATEED will deliver the Lion Foundation Young Enterprise Scheme (YES) Enterprise Days (E-Days) in February. Preparations for Techweek 2017 are also in full swing, with the event taking place in Q4.
ATEED’s Local Economic Development team at ATEED supported a number of local board initiatives that deliver local economic development outcomes. During the period ATEED worked with the Waitematā Local Board to secure grant funding from the Board’s Locally-driven initiatives (LDI) budget to support activation of the Uptown Innovation project. The grant enabled the Uptown Business Association to employ a co-ordinator for this innovation hub.
In December, ATEED supported the delivery of the Lion Foundation Young Enterprise Scheme Awards in Auckland north, south, west and central. We currently have 1400 students registered for E-Day events being held around the region in February.
Attract business and investment The AR/VR Garage (Garage) has grown to house 19 tenant companies as at the end of Q2, and has attracted three corporate sponsors, with a further two expected to sign up by the end of the year. An events calendar has been developed and shared with tenants, partners and sponsors. The Garage has established an alliance with the VR Society in LA, and has agreements in place with multiple tertiary organisations (The University of Auckland, AUT and Media Design School), as well as Unitec looking to move in. At the time of reporting, the pipeline of prospective tenants indicates that the facility will be full by mid-2017. The total GDP contribution of deals affected with ATEED involvement to the end of the quarter is $255 million, which is well over the annual target of $56.7 million. A review of targets against this KPI for the 2017/18 year has been done as part of the development of ATEED’s Statement of Intent for 2017-2020. The variance between GDP actual and target is as a direct result of ATEED realising attribution on a single, abnormally large transaction. The value of investment deals affected by ATEED within the financial year to date is $387 million, exceeding the annual target of $278 million. The number of intensively account-managed customers in the Aroha Auckland programme stood at 32 at the end of Q2, with a risk of not reaching the target of 85 by 30 June 2017, based on the tighter qualification criteria now being applied. Mitigation measures have since been developed to ensure the annual target is met, although it is important to recognise the value of deals and a more effective measure of
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economic growth. ATEED will be engaging with 27 clients who are currently part of the Aroha Auckland programme in February, with the expectation that the annual target will be met.
Grow and attract skilled talent Q2 marked the launch of the CBD Jobs and Skills Hub in Wynyard Quarter. ATEED, together with local and central government, training agencies and employers, launched the hub to provide long-term, sustainable employment opportunities in Auckland. This initiative provides on-site job brokerage and skills training for large developments across Auckland’s city centre, enabling construction employers to connect with entry-level workers. As part of our Employer Pledge programme with our construction pledge partners, ATEED’s delivery of the #BuildAKL campaign progressed well in Q2. The campaign focus was on industry engagement, as well as encouraging entries into the competition. The competition was launched at JobFest (September, 2016) and closed in November, with more than 650 entries. Twenty young finalists were selected, and each received Site Safe and Traffic Control training and other support. Ten winners were selected to start their paid work placements in mid- January, aiming to increase the social media following on the BuildAKL Facebook page. The competition was also covered by NZME media, as part of its Youth Employer Pledge commitment. Work between ATEED’s International Education (Study Auckland) team and Auckland Council on the Ellen Melville community centre refurbishment project (located on High Street) will continue in Q3. The centre is due to open in mid-2017. The Study Auckland team has partnered Education New Zealand to co-design and launch a new international student experience programme, which will continue to take shape during Q3. ATEED works with Youth Connections (Council) to ensure that Auckland’s young people are working and succeeding. Our key sectors of interest are Construction, Tourism, Tech and Health. Through our Employer Pledge programme we leverage business and partner resources to deliver initiatives such as JobFest, the BuildAKL campaign, and the CBD Hub and Skills. We also work with central government agencies to attract and retain skilled talent to New Zealand in the Tech, construction and advanced industries sectors.
Build Auckland’s brand and identity
In early November, there was considerable misreporting in the media, and misinformation spread through social channels, about the final output of the Global Auckland Project – the Global Auckland Story and its key theme (the ‘place desired by many’). This occurred after briefings had been given about the outputs of the project, which was completed in November. The New Zealand Herald subsequently published an opinion piece about the project by ATEED Chairman, David McConnell. This ran on Saturday, 17 December, along with a clarification. It explained that we were invited to provide the piece because of the incorrect way the original story focused on a “slogan” – which was not part of the project. The Herald issued an apology and corrected the number of staff who worked on the project. The delivery of the Global Auckland Project’s outputs signalled the project’s end, and the focus for Q3 will be a new phase of work led by Auckland Council’s Strategic Partnerships team – to identify and develop future commercial opportunities that create outcomes aligned to the Auckland Plan.
The Auckland Short Break campaign, a joint activity with Tourism New Zealand (TNZ) and Auckland International Airport (AIAL), will be in market in early February. The campaign targets the Australian leisure traveller, and capitalises on Auckland’s natural and urban landscape, making it the perfect short-break getaway for Australians.
The Digital Development project continues to gain momentum as we enter into Q3, with a number of pages on the new website set for completion, and preparation steadily continues for the launch of the replacement platform.
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Financial performance and risk management ATEED Letter of Expectation 2017/2018
In December, ATEED received the Letter of Expectation from Mayor Goff. These expectations have been considered and incorporated into the development of ATEED’s draft Statement of Intent (SOI) for 2017-20. The draft SOI will be delivered to Auckland Council for feedback on 1 March 2017, with the final version being produced and submitted to Auckland Council by 30 June 2017. Shared services
Key highlights for ATEED this quarter around greater use of shared services included: . ATEED’s participation in the RFP process to determine a group wide insurance broker. . Working with Council’s travel team to align travel authorisation and procurement processes. . Transitioning to a new H&S Management software in conjunction with Council and Pānuku to deliver consistent monitoring and reporting. . Discussions with Group Finance to gain increased access to tools and capability to enhance ATEED financial management as well as gain further operating efficiency.
Performance against SOI targets As at 31 December ATEED is on track to achieve 17 of its 24 targets set out in the Statement of Intent (2016-19). Five targets are measured on an annual basis and ATEED anticipates that these will be achieved by the end of the year. We are currently applying mitigations to address shortfalls in the number of intensively account managed customers in ATEED’s aftercare programme (Aroha Auckland), as well as the number of International bids submitted or supported by ATEED. Although the number of bids submitted/supported is below target, the value of business event bids won during this financial year is expected to exceed target. Detailed commentary on a number of key targets is included in section 6 of this report.
2. Strategic framework and focus areas ATEED’s Strategic Framework
ATEED’s Strategic Framework (Figure 1 below), clearly articulates ATEED’s role in creating the world’s most liveable city, by focussing on five key priorities: 1. Grow the visitor economy 2. Build a culture of innovation and entrepreneurship 3. Attract business and investment 4. Grow and attract skilled talent 5. Build Auckland’s global brand and identity. Through these objectives, we can connect Auckland-wide strategies (the Auckland Plan and Economic Development Strategy) and ATEED’s ongoing strategic interventions, growth programmes and projects. The framework below provides the organisation with focus on those areas of our role that will make a difference to Auckland. The key strategic objectives are supported by more detailed action plans, investment proposals and delivery partnerships.
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Figure 1: ATEED’s Strategic Objectives
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Strategic Issue: Accommodation Provider Targeted Rate
As the tourism industry starts 2017 in a stronger position than ever before, industry leaders are faced with big decisions about how to fund tourism infrastructure to keep pace with this unprecedented growth, as well as tourism marketing to continue to drive visitor demand growth into Auckland.
The Auckland Visitor Plan 2021 is one of ATEED’s key strategic pillars. The visitor economy continues to boom as the Auckland Visitor Plan, launched by ATEED in 2011, and other related strategies, continue to deliver great results. Partners Auckland International Airport, industry operators and Tourism NZ, have contributed to record visitor numbers. The targets outlined in the 10-year Auckland Visitor Plan have been exceeded after only 5 years. As such the timing is right to explore ways that ATEED can reduce reliance on ratepayer funding and have a more sustainable long-term solution to support destination marketing and management.
There are currently two key approaches being discussed, one at a national level where the discussion is focused on visitor industry infrastructure requirements; and the other at a local level focused on sustainable funding of destination marketing, destination management, business events, and major events.
Auckland approach – visitor attraction ATEED currently allocates about $28m in ratepayer funding towards destination marketing, destination development, major events, international education, and support services. The current approach is to design and implement an alternative revenue option that would look to replace this portion of ratepayer funding. A number of options have been discussed, including one of a national visitor levy or tax collected locally. Imposing a national tax requires a change in legislation and approval from the Government via parliamentary bill, and therefore will likely take longer to implement. The revenue generated by a mechanism like this is unlikely to be passed in full to Auckland Council or ATEED. At the local level, Council has jurisdiction to implement a targeted rate. This would allow a faster implementation as well as allow rated businesses to have greater control over the design, timing and use of such a fund when compared to the features of a nationally developed solution.
Mayor Goff has expressed his intentions to implement a targeted rate from 1 July 2017, and for this to be included in the 2017/18 Auckland Plan. ATEED has been working closely with Council and the accommodation sector since late 2016 on the Accommodation Provider Targeted Rate project, aiming to find a solution that is as fair as possible, while aligning funding to those who benefit the most from the booming visitor market.
The proposed rate would be applied to all hotels, motels, backpackers, purpose-built bed and breakfast or lodge accommodation, short-stay apartments, camp grounds and cabins. Such a rating structure would not capture providers operating from residential properties, homestays, Air BnB rentals and holiday lets or private bachs. Air BnB and other such sites have verbally offered to pay their fair share by applying a levy on sales and passing this on to Council. By taking this approach, Air BnB and others can be seen to contribute and support the industry and the city.
An advisory steering committee comprising of accommodation sector representatives, Auckland Council Group Finance and ATEED’s Chief Executive has been formed by the Mayor’s office, chaired by Councillor Desley Simpson and also attended by Councillor Ross Clow. The project team is working with industry stakeholders to decide on the methodology of the rating, and a governance model that will oversee how the funds are spent. A proposal document will be available for public consultation from mid-February 2017. ATEED continues to provide support to the project team in the Mayor’s office with regards to industry advice and stakeholder management in particular, and is continuing to receive feedback from local industry partners across the sector.
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National approach – visitor levy The value of the tourism industry nationally has grown from $28b a year to $35b during the past two years. The challenge for the Government and the industry is now less about funding marketing and promotion (which is currently done via Tourism New Zealand), but to keep pace with the unprecedented growth in visitor arrivals and the pressure this is putting on local infrastructure, especially in smaller towns and remote parts of the country with low ratepayer bases such as Queenstown, Tekapo and the West Coast.
The tourism industry, via Tourism Industry Aotearoa (TIA), is putting pressure on the Government to increase its investment in this infrastructure by sharing the revenue it receives through GST collected from tourists, currently totalling $1.2b annually from international visitors (YE March 2016). When GST paid by domestic travellers is included, the total GST take from annual tourism spend is $2.8 billion2.
TIA and funders from the industry, including ATEED, have also commissioned a report (the National Tourism Infrastructure Assessment) from Deloitte on the national infrastructure requirements of the industry to gauge the level of funding and time required to address these issues. The report is due in February 2017. Auckland-specific infrastructure requirements include a long-term solution for berthing larger cruise ships, a rail solution to the airport, more hotel investment, and localised development in infrastructure such as parking, toilets and road upgrades (for example Waiheke). This report is not only going to provide recommendations for funding solutions, but also outline the key areas requiring investment in infrastructure across the country.
In 2016, a group of tourism leaders from the private sector led by Air New Zealand, commissioned a report by McKinsey to look at options from around the world that could be applied to New Zealand, and recommendations were presented to the Government late last year. The industry recommendation was that an infrastructure fund be established from a combination of an increase in the existing boarder levy, and a national accommodation levy (bed tax) to collect $65m, and for this to be matched by the Government to create an annual fund of $130m.
Discussion on a visitor tax, or bed tax has taken place for many years, and while some industry stakeholders have raised concerns regarding how the funds would be raised and collected and the fairness of it, this option is now being seriously considered by the Government. A number of countries, states and cities around the world apply some form of a visitor tax, and although this can pose a risk to visitor attraction, it is not generally seen as a deterrent and comes with a number of benefits, such as increased funding and industry input. A recent meeting with Deputy Prime Minister and Tourism Minister, Paula Bennett indicated that she is currently considering the Government’s approach to the challenge which the industry will be seeking prior to the upcoming election in September 2017.
Council and representatives from the funding segments (i.e. accommodation providers) will need to agree how Auckland should be represented on the governance structure for this proposed national visitor levy. ATEED will play a role in providing input and advice to council and the sector to determine how the fund could be allocated and applied.
2 https://tia.org.nz/about-the-industry/quick-facts-and-figures/
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3. Key deliverables and highlights for the last quarter Summary of key deliverables – Quarter 2 Completed / Status Deliverable carried over / Comments
deferred Build a culture of innovation and entrepreneurship
Number of businesses taking up tenancy 76 at the end of Q2, which is above at GridAKL and percentage ‘Innovation- ongoing ATEED’s annual SOI KPI target of 55. led’ Number of actively managed business 383 businesses were managed as of through the Regional Business Partner ongoing 31 December, on track to meet Network ATEED’s annual SOI KPI target of 720.
Attract business and investment
Facilitation of the establishment, or Three significant multinationals during significant expansion, of multinational the year-to-date. Two of the multi- nationals newly established are in the and local companies in target sectors construction sector, with the remaining (LTP Measure) one from the screen sector. Total GDP contribution of deals affected $255 million, which is well over the
with ATEED involvement target of $56.7 million. Value of investment deals affected by $387 million, exceeding the target of
ATEED within the financial year $278 million. 32, with a risk of not reaching the target of 85 by 30 June 2017, based on the tighter qualification criteria now being Number of intensively account-managed applied. ATEED will be engaging with customers in ATEED aftercare 27 clients who are currently part of the programme (Aroha Auckland) Aroha Auckland programme in February, with the expectation that the annual target will be met.
Grow and attract skilled talent
Lion Foundation Young Enterprise Completed for Delivery of Young Enterprise Scheme the 2016 Awards in Auckland North, South, West Scheme Awards academic year and Central. Launched. This is a collaboration CBD Jobs and Skills Hub supported by local and central government, training agencies and employers, and aims to provide long- term, sustainable employment ongoing opportunities. This initiative provides
on-site job brokerage and skills training for large developments across Auckland’s city centre, enabling construction employers to connect with entry level workers. Progressed well in Q2 with a focus on #BuildAKL Campaign industry engagement, as well as ongoing encouraging entries into the competition. Grow the visitor economy
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Completed / Status Deliverable carried over / Comments
deferred Successful delivery in partnership with Diwali Festival of Lights Completed the Asia New Zealand Foundation. Facilitation of the race and delivery of ITM Auckland SuperSprint Completed ancillary events (drive-in movie and Fan Day). Auckland hosted the Aon Youth Sailing World Championships, between 14 - 20 December. During the regatta more than 380 sailors from 65 nations sailing in more than 260 boats, competed in nine disciplines. World Youth Sailing Completed The event was well-aligned to showcasing Auckland’s on-water lifestyle, marine capability and commitment to sailing. Hosting this event was an important step for Auckland to host other World Sailing events in the future.
FINA World Women’s Youth Water Completed Polo Championships ATEED supported these events as part Bledisloe Cup Completed of the 2016/17 Major Events Portfolio.
ASB Marathon Completed
Taste of Auckland Completed
Grow the visitor economy
The visitor economy continues to boom as the Auckland Visitor Plan (2012-2021) and other related strategies and developments in the sector continue to deliver great results.
In 2016 tourism spend in Auckland was $7.51b, up 10.9 per cent on the previous year. This is well above the $6.17b target for 2016 set in the Visitor Plan, and already ahead the 2019 target of $7.44b. International arrivals to Auckland were at a record-high year-to-date for December 2016, with the number of arrivals at 2.49m – up 11.9 per cent compared to the previous year. Hotel occupancy continues to be high, up 86.5 per cent on average in 2016, up 3 per cent compared to the previous year. The average daily spend rate also increased in 2016, with the average daily rate at $183, up 11.6 per cent. ATEED is aware that December arrivals were lower than in December 2015, and that January 2017 arrivals have exceeded January 2016. ATEED will continue to monitor arrivals and report on trends in the Q3 report.
i-SITEs The Auckland Airport i-SITE won an award at the i-SITE New Zealand Conference in October for the highest customer satisfaction rating across the country (91 per cent). This is an excellent achievement and the team continues to exceed the customer satisfaction target set in ATEED’s SOI of 85 for the year.
The Princes Wharf i-SITE was renamed the Lower Queen Street i-SITE following the move to the new location on 1 December. The new i-SITE is housed in two Portacom buildings, located between two significant construction projects – the City Rail Link (CRL), and the Commercial Bay development. The new location is positioned to be
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seen by domestic and international visitors arriving on cruise ships. ATEED opened the new site on time and on budget, despite tight timeframes to source, design and fit-out a suitable solution to house the centre. ATEED has been offered the position at Lower Queen Street until 1 May 2017. A permanent space for the Lower Queen Street i-SITE is still being considered, and discussions continue between key stakeholders.
As noted in email correspondence to councillors and the Mayor, the Waiheke Island i-SITE was closed on 1 November. This was prompted by the resignations of i-SITE staff at Matiatia Wharf, a continued decline in sales, and the i-SITE losing about $110,000 a year. Two students have been employed in the Tourism team to act as ‘greeters’ at Matiatia Wharf, and to provide many of the services on offer through the i-SITE service, including providing visitors with local advice, direction and general information. The greeters are, however, unable to book tourism products on behalf of visitors.
The greeters will be in place every morning at Matiatia Wharf until the end of April 2017, to cover the peak summer period and World Masters Games 2017. ATEED will continue to lease the kiosk that the greeters are based in from Auckland Transport until the end of June 2017. ATEED is working closely with the Waiheke Local Board and the Waiheke Island Tourism Forum on the future visitor information offering.
World Masters Games 2017
ATEED’s subsidiary, World Masters Games 2017 Ltd (WMG2017), has made tremendous progress towards Auckland hosting this global event.
Key milestones in Q2 included the review and approval of the Leverage and Legacy programme. ATEED, a key facilitator for the programme, worked with MBIE to agree on the objectives. A Leverage and Legacy forum has been established to run beyond the event itself and quarterly reporting to MBIE is underway.
By the end of Q2, five sports (archery, football, hockey, golf and softball) reached capacity for the WMG2017. Waiting lists for these sports are in operation.
Accommodation
As previously reported, accommodation availability and price gouging remains the biggest risk/issue to the organisation. Work has continued to identify potential facilities for motorhomes within the Auckland region during the 2017 events period, resulting in the creation of a pop-up campervan park on the infield of Ellerslie Racecourse. Following work with Auckland Racing Club, 350 non-powered sites will be provided for self-contained campervans available from 18 April – 3 May and again in June and July during the Lions series. Campers will have a range of facilities available including toilets and shower.
Pricing for accommodation for WMG2017 is still an issue, but to a lesser extent than in Q1. New accommodation has come into operation, such as Swiss-Belsuites in Victoria Park, and the owners have been introduced to a number of different event organisers.
Major Events The ITM Auckland SuperSprint took place at Pukekohe Park Raceway from 4 to 6 November. The Fan Day delivered as part of the event included a display of classic American muscle cars on Lower Queen Street, as well as the Supercars drivers parading up Queen Street in classic cars, and activities in Aotea Square. The Fan Day followed on from the free ITM Auckland SuperSprint Karting event at three Auckland karting tracks on 1 November.
All post-event surveys have been completed, and the data is being assessed for the full post-event evaluation.
Supercars Australia released attendance numbers of more than 106,000 for the weekend. This is down on previous years which have had an average attendance of about 116,000. Supercars Australia is seeking a decision about
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whether ATEED, on behalf of Auckland Council, wishes to renew the contract beyond 2017 (the final event covered by the existing five-year contract will be held in 2018).
Other major events delivered and/or facilitated in Q2 included, the Bledisloe Cup (All Blacks v Wallabies, 22 October), ASB Auckland Marathon (30 October), Taste of Auckland (17-20 November), Royal New Zealand Navy 75th Anniversary International Naval Review (17-22 November), WhitewaterXL Auckland Invitational (20-27 November), Farmers Santa Parade (27 November), FINA World Women’s Youth Water Polo Championships (12- 18 December), Youth Sailing World Championships (14-21 December).
Auckland Convention Bureau (ACB) The Auckland Convention Bureau has achieved an 86 per cent win ratio as at 31 December 2016, against a target of 60 per cent for the year. At the same point, 19 international bids have been supported with an estimated value of the business events won is $18 million, marginally below ATEED’s target for 2016/17 of $19m.
NZICC ACB and NZ International Convention Centre met monthly to discuss the sales pipeline and opportunities, business planning, general marketing, specific events such as trade show attendance, client site inspections and famils stemming from the NZICC being built. There are also ongoing discussions with NZICC regarding the planning and development of the ACB, NZICC and TNZ Co-Marketing proposal. NZICC has appointed a Director of Sales who commenced in October.
Golf, Equine, Marine, Screen (GEMS) programme ATEED facilitated a visit by senior directors of the China Cup – which is the largest sailing regatta in China. ATEED has sponsored a category at the event for several years, as part of its GEMS programme to develop relationships with high net-worth investors, potential investor migrants, and luxury travelers from China. The visit included tourism experiences and business meetings with a number of technology businesses, as well as a visit to Emirates Team New Zealand. ATEED has been following up on a number of positive actions from the work that has been carried out, including the provision of information for potential migrant investors, and the establishment of a potential technology fund.
During Q2, ATEED engaged with a number of stakeholders to identify possible sponsors for an Auckland-based New Zealand Volvo Ocean Race Challenge.
ATEED has formalised a partnership with the New Zealand Bloodstock Ltd (NZB) to attract and provide investment opportunities for high net worth investors (HNWI) from Asia, Australia and the US.
Cruise infrastructure Queens Wharf Mooring Dolphin
Ovation of the Seas, the largest cruise ship to visit New Zealand and the fourth largest in the world, berthed in Auckland for the first time on 27 December. She will visit three times during the 2016/17 cruise season, and three times during 2017/18. The 350m megaship enjoyed a special welcome on the water by the waka Haunui, with a haka Powhiri performed by Te Waka Huia both on Halsey Street Wharf and on board the ship.
Ovation of the Seas is too long to berth at the existing cruise terminals, so moored in the Waitematā Harbour with 4500 passengers needing to be tendered ashore.
Options for interim infrastructure to accommodate larger cruise ships such as Ovation of the Seas include the use of the existing port berths or Wynyard Wharf, as well as the proposed addition of mooring dolphins or wharf extensions at Queens Wharf, Princes Wharf or Halsey Street Wharf.
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As larger ships replace older ships, investment in fit-for-purpose cruise infrastructure is essential in order for the industry to continue to grow. Cruise is now the fastest growing sector in tourism, with the last five years seeing the size of New Zealand’s cruise sector doubling and forecasts show no sign of this growth abating. Nearly 50% of cruise ships currently on order to be built and likely to be deployed to the Asian region, are not able to be berthed in Auckland due to the lack of infrastructure. Cruise lines are continuing to show interest in including New Zealand and Auckland (as an exchange port), however without the provision of suitable berth infrastructure the city will be unable to influence deployment decisions. “The ongoing delays and uncertainty surrounding the resolution of the City’s ability to dock large Cruise Ships is beginning to impact the likelihood of large Cruise Ship arrivals for 2018/19 season. A mooring short-term facility at Queens Wharf has been endorsed to date as the optimal interim solution. A resource consent will not be lodged by Pānuku Development Auckland until March 2017 to allow further analysis to take place. The concrete dolphin is proposed to be 75m out from the end of Queens Wharf and connected to the wharf by a gangway for port worker access. The consent application will be publically notified.
Preparation of the resource consent has included consultation with key stakeholders, including the Waitematā Local Board Chair and previous opponents to the Bledisloe Wharf reclamation. Pānuku also engaged with its Mana Whenua Forum on a number of occasions during preparation of the consent.
During the period ATEED continued to support the development of local tourism initiatives in partnership with local boards and tourism cluster groups around the region. ATEED’s work with local boards included the following:
. ATEED continues to work with the Great Barrier Local Board to support an application being made by the Awana Rural Women’s group to support the Dark Sky Sanctuary. An initiative of the International Dark- Sky Association, a sanctuary is public or private land that has an exceptional or distinguished quality of starry nights and a nocturnal environment that is protected for its scientific, natural, or educational value, its cultural heritage and/or public enjoyment. The Great Barrier Local Board has allocated $10,000 funding and a draft application for Dark Sky Sanctuary accreditation will be submitted in Q3.
. A Franklin-wide assessment of motor campervan and camping facilities is also being carried out with support from ATEED. The assessment will identify whether there is a need to provide additional facilities or improve existing facilities in order to encourage more visitors to stay overnight in the Franklin region. Q3 will see stage two of the Hunua Cycle Trail project progress further, which will include the Economic Impact Assessment that will be carried out in order to progress the development of the trail to the next stage. The assessment will look specifically at the benefits that the Franklin region will experience by making the Hunua Ranges more accessible to visitors and support local businesses.
Build a culture of innovation and entrepreneurship
GridAKL
Auckland’s culture of innovation continues to grow with the constant development of the GridAKL hub. The city has matured to the point where we are recognised for our high-tech sectors and locally-born global companies.
The formal ‘place’ development work stream for GridAKL continues to gain momentum. The Lysaght Building has cemented itself as a start-up hub amongst the innovation community. The number of resident businesses grew to 76 at the end of Q2, bringing the total of people now working at the Lysaght building to 169.
In Q2, ATEED facilitated a visit to GridAKL by a Gravity Pictures delegation from China for an Augmented Reality/Virtual Reality (AR/VR) demo. This was a joint venture between China Media Capital, Warner Bros. and Shaw Brothers Pictures Ltd. Mayor Phil Goff and councillors visited Lysaght in early November. The Tech Café has continued to establish itself as a place for the public and pre-seed start-up businesses to connect to GridAKL.
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203 tech café members joined in the tech café pilot phase. Based on the users’ feedback from the pilot, a new paid for membership offer will be launched in March, which will provide additional added value for members of the Grid community.
Construction works continue on the building at 12 Madden Street. The internal fit out of ATEED’s design is progressing well with the main structure now complete and the roof framing underway. The contractor has reported a delay of four weeks on building the external façade and is currently pushing to recover this time. The programme remains on track for practical completion in mid-June this year. However, the delay to the façade will be closely monitored as this may delay the overall completion date if not recovered.
In December, ATEED released to market a request for proposal opportunity to recruit a Place Operator to manage part of the facility (encompassing the ground to third floors). A preferred Place Operator was selected and is discussing potential design changes with ATEED to support required programme outcomes. A negotiation phase with the preferred bidder is scheduled for completion in Q3 (early March).
Mason Brothers’ head lease starts in April and physical works are progressing on track for completion in June.
The procurement of soft fit-out items has been initiated in Q2 to enable operation to start by May. In preparation for the opening, options for an operational model and marketing materials are being developed as part of the wider GridAKL tenant marketing campaign. A number of prospective tenants continue to show an interest in the space, and ATEED is engaging with them to understand their requirements.
Future buildings – 10 Madden Street Following advice from Council, ATEED did not seek approval to proceed with leasing 10 Madden Street. During the period, ATEED considered the detailed financial implications of the scheme. Advice from council and the Mayor’s office has indicated that funding was unlikely to be approved outside the LTP process.
GridAKL community There were 86 events hosted at GridAKL in Q2, bringing the total number of events to 283 at year end.
Key events included the launch of the ‘Hardware’ meeting group, a post Singularity University Auckland event following the summit held in Christchurch in November. The YMCA Raise Up Graduation Innovation challenge took place in December. The event was an end of year celebration for 100 YMCA youth. Split into regional groups, they aimed to solve one of the United Nations’ Global Issues using the Lean Canvas concept to come up with a new start-up.
In addition to these events, a successful GridAKL feature campaign was released through The Spinoff, a prominent new digital media channel. Early metrics show that this was well received with up to 4,000 online reviews of some articles and extensive social media reach. The New Zealand Herald also published a feature on BoardPro (BizDojo at GridAKL resident), which generated great publicity and a significant spike in inquiries and trial requests.
Techweek Work in preparation for Techweek ‘17 started in Q2. Techweek ’17 will involve events held throughout the country from 6-14 May 2017 and will be delivered by NZTech with some financial support from ATEED.
Activity that occurred in Q2 included: . Submissions for event ideas that will shape the nationwide event opened in November. . 116 submissions were received. One event of international significance (Tier 1) has been identified and another 19 which we believe will be of national media interest (Tier 2). The majority of events were proposed for Auckland and 55 were proposed to run in multiple cities or outside of Auckland. . Social media platforms are live (www.twitter/techweeknz, www.facebook/techweeknz, www.instagram.com/techweeknz).
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. The establishment of an Advisory Group tasked with reviewing event proposals and shape the 2017 event programme; including ATEED representatives. . The establishment of a board of influential and independent leaders who are ‘NZ Inc’ focused. This group will develop the long-term strategy for Techweek to achieve goals for 2019 to fill the NZICC and attract a 20 per cent international audience to Auckland events.
At the end of Q2, partners included NZTE and MBIE. Auckland and Wellington are official city partners and discussions were held with Christchurch, Hamilton, Dunedin, Tauranga and other centres.
The Lion Foundation Young Enterprise Scheme (YES) The Young Enterprise National Awards ceremony was held in Wellington on 6 December. Five Auckland teams won seven awards. Each award winner collected a $1000 cash prize.
More than 1000 Auckland students set up and ran more than 200 companies this year. The breadth of companies is testament to the culture of entrepreneurship developing in Auckland and supporting young people on their journey into the world of work.
Tertiary Student Entrepreneurship Programme
ATEED continued to seek opportunities across Auckland's tertiary education sector to develop student entrepreneurs. Activity in Q2 included:
Six out of the 10 student entrepreneurial initiatives funded through the Student Entrepreneurship Contestable fund finished in Q2: . 26 students from the Media Design School participated in the Games Accelerator programme, and five commercial entities have been formed as a result. . Unitec held an Enterprise Challenge where five teams pitched their ideas to a panel of experienced entrepreneurs, with one winner. . University of Auckland Agri Initiative had three entries out of the 17 finalists selected for the Velocity $100,000 Challenge which is the key competition run out of the Centre for Innovation and Entrepreneurship at the University of Auckland. . Ideate – a pilot project run by the University of Auckland that primed students to prepare for the university’s Velocity Entrepreneur challenge. . UniServices from the University of Auckland, held a series of workshops to prepare students to pitch for funding from Return on Science, a national research commercialisation programme that delivers new research to market from universities, research institutions, and private companies. . CO.STARTERS, run by AUT, was a nine-week programme that equips aspiring entrepreneurs with the insights, relationships, and tools needed to take the next step.
Nearly 800 students took part in the above-mentioned initiatives.
Attract business and investment
Project Palace (Auckland accommodation sector – planned and scheduled construction)
ATEED is partnering with NZTE on Auckland site suitability for hotel developments for offshore investment – an opportunity to secure FDI investment into Auckland's hotel sector to meet visitor forecasts for increased room night demand.
In Q2, ATEED continued to engage with a number of parties expressing interest in the Auckland accommodation sector and presented Auckland sites. At the end of Q2, ATEED was working with nine potential hotel sites.
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Other activity in Q2 included:
. An approach by ATEED to Pānuku Development Auckland for more information about Council-owned sites that could be suitable for hotels. The engagement of a member of Pānuku’s staff by ATEED to use Pānuku’s relationships with Chinese investors to formulate a strategy and present hotel opportunities in Auckland. . The inspection of further sites outside Auckland’s CBD for possible inclusion in Project Palace. . Meetings between ATEED, NZTE and Auckland Airport to discuss Auckland Airport’s plans for hotels and further airport development. . Presentations by NZTE at the recent China Investment Tourism summits held in Auckland and Queenstown. The presentations covered the Project Palace initiative and some of the direct Auckland investment opportunities.
AR/VR content creation The AR/VR Garage continues to grow, with 19 resident companies at the end of Q2. Applicants are carefully selected by ATEED to ensure the right companies come together to collaborate.
During the period, ATEED continued to assist several resident companies with their plans to establish a presence on the US west coast. ATEED achieved this by introducing those companies to contacts within NZTE, and to entities that support the establishment of foreign companies in the US.
Tertiary institution ties were formalised with AUT Co-lab, Media Design School (MDS) and University of Auckland. MDS announced its commitment to the AR/VR Garage while leveraging its new Emerging Technologies curriculum.
ATEED secured a strategic partnership with Microsoft New Zealand in November – the first global technology brand to officially partner with the AR/VR Garage. Microsoft will introduce its new Microsoft HoloLens and Windows Holographic technology to the growing Auckland and New Zealand AR/VR community through the Garage.
ATEED is pursuing HTC to set up a global Vive X presence, and has established relationships with Victoria State Government around potential collaboration between Melbourne (Australia's most active VR City) and Auckland – particularly around VR gaming. ATEED worked closely with both the NZ Games Developers Association and the International Games Development Association.
Q2 activity also focused on completing the fit-out of the showcase area before the end of the year, including providing shared infrastructure and tools that can be used by the tenants. Further development of the project pipeline to create a world-class AR/VR collaboration hub will continue in order to impress international visitors and investors. ATEED continues to explore multiple avenues for funding this activity through corporate sponsor funding and partnerships.
The Garage is looking to engage with a number of Auckland events throughout 2017, developing a service delivery platform for digital technology that can be built on over the next few years to make Auckland the most AR-activated city in the world. Events include WMG2017, Techweek ‘17, StoryEdge Conference, DHL NZ Lions Series 2017, and LPGA, amongst others.
FinTech Hub ATEED have had preliminary discussions with a number of industry organisations interested in the development of a FinTech hub in Auckland CBD. The migration toward a full consumption finance model presents exciting exponential growth opportunities for Auckland in the new global digital economy.
Auckland is New Zealand's financial services hub with 18 of the 25 banks registered in New Zealand locating their head office in this city. Global financial services support companies such as SAP and Oracle, Fiserv, Paymark,
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Banklink, MYOB and Xero all have their New Zealand head office in Auckland. Financial research giants such as Gartner, IDC, Thompson Reuters and Morning Star all have offices in Auckland. Industry organisations such as Institute of Finance Professionals, NZ Venture Capital Association, and regulators such as Financial Markets Authority, and Serious Fraud Office have their head offices here.
In addition, more than half of New Zealand's tech companies are based here. The agglomeration and combination of these two high skill, high productivity, high-income-generating and high growth sectors in Auckland are why public sector policy and investment needs to investigate whether there are ways we can support the growth of this sub sector which is globally growing faster than any other.
A FinTech workshop with industry participants took place in December to investigate the feasibility of establishing an Auckland FinTech hub. Further investigation is currently underway with a second workshop scheduled late February to quantify the projected intervention benefits for Auckland.
Screen
During the period ATEED continued to hold discussions with the owner of a major land holding at Kumeu which features some re-purposed and some purpose-built screen facilities constructed by major international studios Warner Brothers and Gravity Pictures for the filming of MEG on the site in partnership with the owner. As noted in Q1, ATEED believes these assets could provide significant legacy infrastructure for Auckland’s screen industry, and create a point of difference for our industry in the global marketplace. ATEED believes there is a significant opportunity for a future partnership potentially involving Auckland Film Studios (AFS), an international studio, the Government and the site owner which could involve investment in the development of a new sound stage (the current production is using AFS’ sound stage). In November Mayor Phil Goff, Deputy Mayor Bill Cashmore, and Councillors Penny Hulse, Linda Cooper and Ross Clow visited the Kumeu Film Studios site. The Mayor and Councillors provided positive feedback about ATEED’s concept for further development with the landowner. At the end of Q2 ATEED continued to hold commercially confidential discussions between various parties are about how a sound stage development could occur, as well as an operating model for a future site. These discussions took place alongside necessary due diligence, financial analysis and input from Council’s legal team. Council’s Auckland Film Studios is fully booked until August 2017 with several enquiries going onto 2018. Revenue growth within Auckland’s screen production industry is being fuelled by this strong demand.
The New Zealand Asia Pacific Film Festival started in mid-November. Two high profile international television shows started pre-production this quarter. During Q2, ATEED’s Screen Auckland team issued 175 film permits, bringing the total to 325 as at 31 December, compared to 272 permits for the same reporting period in 2015/16.
Grow and attract skilled talent
As part of Council’s wider priorities, ATEED continued to focus on programmes which help to reduce social inequality by accelerating the prospects of Auckland’s young people. This came from delivering initiatives which encourage youth entrepreneurship and create employment pathways.
Youth Employment Pathways Programme
The BuildAKL campaign is a partnership with industry employers to encourage youth into construction and infrastructure employment and careers. Recruitment days took place on 5 November (Albany), 9 November (Henderson), and 11 November (MIT Otara). Twenty finalists each received Site Safe and Traffic Control training and other support. Ten winners were selected to start their paid work placements with seven employers in mid- January, aiming to increase the social media following on the BuildAKL Facebook page. The competition was also covered by NZME media, as part of its Youth Employer Pledge commitment. The target for the 12 month campaign
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(live to Sept 2017) is to attract 4,000 young people under 25 years either into employment or education and training pathways, into the construction/infrastructure career3.
The ATEED-sponsored Got a Trade Speedmeet in late October at MIT in Otara attracted 25 south Auckland employers.
ATEED launched the CBD Jobs and Skills Hub in Wynyard Quarter. This is a collaboration supported by local and central government, training agencies and employers, and aims to provide long-term, sustainable employment opportunities. This initiative provides on-site job brokerage and skills training for large developments across Auckland’s city centre, enabling construction employers to connect with entry level workers.
The initiative is designed to address labour shortages for businesses and provide jobs and training in Auckland’s CBD. Across Auckland there are 32,000 jobs that need to be filled in the construction sector alone, as well as considerable demand in hospitality and tourism. These sectors all have significant opportunities for job creation.
The CBD Jobs and Skills Hub follows on from the success of the Ara Airport Jobs and Skills Hub and complements the #BuildAKL campaign. The hub was formally announced by Minister Steven Joyce on 9 November and ATEED will continue to develop the project over the coming months.
Young at Heart Awards On 12 October, ATEED delivered the ‘Young at Heart’ Awards 2016 as part of the Youth Employment Pathways Programme. The awards recognise the contribution 57 businesses that have signed Auckland’s Youth Employment Pledge, showing their commitment to helping young jobseekers. SKYCITY was recognised as the Auckland Youth Employer of the Year, by the independent judging panel.
Investor migrant update
ATEED continued working with the investor migrant division of Immigration NZ (INZ) in Q2. In October, ATEED assisted INZ to organise and connect with potential investors for four attraction events in the US including the All Blacks test in Chicago (ATEED did not attend/travel to US).
ATEED also prepared a brief paper on barriers to Chinese investors integrating into New Zealand.
ATEED also fielded investor enquiries and prepared schedules for two investor migrants looking to invest in Auckland property and tech companies respectively.
In December, the Minister of Immigration announced changes to the Investor Migrant policy. Growth Investment is incentivised and the minimum investment in the Investor 2 category is now $3m (up from $1.5m). There is no change to the Investor Plus minimum investment of $10m. The other notable change is that philanthropic investment is now acceptable up to a maximum of 15 per cent of total investment capital. The new conditions will be implemented in May 2017.
The new Global Impact Visas programme (GIVS) was launched in Silicon Valley in late October, and the first intake has already been oversubscribed with applications from more than 50 countries. The GIVS programme is managed by the Edmund Hillary Fellowship which will see up to 100 international and 20 New Zealand-based Fellows selected each year to join a diverse community of exceptional entrepreneurs and investors. International candidates are invited to apply for a Global Impact Visa, a three-year open work visa for New Zealand, while all Fellows receive access to partner networks and individualised support to succeed in their ventures.
3 The mid-campaign evaluation will get underway in Q3 and will use proxy measures to estimate its impact. The evaluation will also gather feedback from industry employers about the trends they have identified as a result of campaign activity. The post campaign evaluation and analysis is planned for Q4 2016-17.
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ATEED has prepared a draft aftercare programme that will seek to leverage and integrate the 180 Auckland-based investor migrants into the region. This programme will be discussed with INZ in the New Year, and take into account the latest INZ research into investor migrants, released this month.
Enabling education and talent
ATEED’s International Education team continued to work closely with Council and central government agencies to ensure international students make the most of their time in Auckland and are aware of some of the pitfalls that new arrivals often encounter. During the period, ATEED began to develop A ‘Safety in the City’ video, providing advice for students on personal safety, employee rights, and sexual and mental health issues.
Study Auckland, the member organisation administered by ATEED, hosted six international education agents from Colombia and Brazil in Q2. The agents visited universities, private tertiary providers, language schools and secondary schools across Auckland. Study Auckland also hosted a business networking event for Auckland-based agents and 40 Auckland education providers.
In October, Study Auckland attended the Education New Zealand event series in Japan, holding student fairs and business-to-business seminars in Fukuoka and Tokyo. ATEED also co-hosted an education reception in Fukuoka as part of the 30th anniversary of the Auckland-Fukuoka sister city relationship.
Amendments to the Skilled Migrant Category during Q2 have affected the New Zealand Residence Programme. As a result, Study Auckland hosted an industry update for education providers in November. INZ attended the event and briefed education providers about the latest changes to immigration policy and the pathway student visa pilot programme. The changes include:
. The points threshold for selection has been increased from 140 to 160 from 12 October 2016 (regardless of whether an applicant has a job offer). . The way applicants show evidence that they meet the minimum standard of English language has been revised.
A suite of four new graduate video stories subtitled in seven languages have been developed to showcase the employment and skilled migration pathway options of international graduates educated in Auckland. Study Auckland is working on developing new graduate pathways in partnership with ENZ, INZ, Auckland Chamber of Commerce and specialist ICT employment service provider Industry Connect.
EIC Education, one of China’s largest education agencies, promoted Auckland as a study abroad destination during the China Cup Regatta in October in Shenzhen.
Build Auckland’s brand and identity
The Global Auckland Project delivered its key output in November, a narrative Global Auckland Story which reflects the findings of what ATEED believes was the most in-depth piece of research into modern Auckland. ATEED also delivered comprehensive sector value propositions, which were developed through an important parallel piece of work.
Unfortunately, a copy of the story (or part thereof) – which was initially intended for Council group use only – leaked to the New Zealand Herald, which used it to publish a totally inaccurate front page article about a “new slogan” for Auckland. The paper’s story was followed up by other media and public commentators, who continued to misrepresent the project – likely damaging ATEED’s ability to discuss with the private sector how it can work with Council to benefit from the story and value proposition work. As per previous comments
The New Zealand Herald subsequently published an opinion editorial about the project by ATEED Chairman David McConnell. This ran on Saturday, 17 December, along with a clarification. It explained that ATEED were invited to
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provide the piece because of the incorrect way the original story focused on the “slogan” aspect. The Herald issued an apology and corrected the number of staff who worked on the project.
The development of the Auckland Story was designed to complement central government’s ‘New Zealand Story’, which is used by MFAT and NZTE for New Zealand businesses, agencies, individuals and organisations looking to reach out to the world. It was signalled for several years through the established CCO reporting and Statement of Intent process.
ATEED has now completed this project and the work has been passed to Auckland Council’s Strategic Partnerships group.
Marketing campaign ATEED’s spring marketing campaign, More to Explore, featuring popular Kiwi actress Robyn Malcolm, ran from 1 September to 31 October 2016. The campaign included a series of video diaries with Robyn showcasing Auckland’s regional gems, including Huia and Waitākere, Franklin/Awhitu Peninsula, Matakana Coast, Great Barrier, Pōhutukawa Coast, Hauraki Gulf and Northwest Country (Kumeu). This campaign contributes to ATEED’s ‘visiting friends and relatives’ (VFR) strategy. The VFR market accounts for approximately 30 per cent of domestic visitors and 40 per cent of visitors from Australia each year. The campaign was recognised by 61 per cent4 of the market (overall across both Auckland, and out of Auckland), which is a very strong result.
4 The ATEED benchmark for the More to Explore campaign was set at 26 per cent.
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4. Key deliverables and highlights for the next quarter Grow the visitor economy
Golf, Equine, Marine, Screen (GEMS) programme ATEED will sponsor activity at the annual New Zealand Bloodstock (NZB) Karaka Million for the third year on 29 January 2017. ATEED will also work with NZB to welcome and host international buyers, premier sale vendors and top New Zealand buyers who have all arrived in Auckland ahead of the National Yearling Sales series (Karaka 2017) starting on 30 January.
ATEED, in conjunction with the Royal Akarana Yacht Club, will welcome the second group of China Cup Sailing school students to Auckland as part of their New Zealand Winter Camp programme, which runs from 14 to 27 January. Discussions are also taking place between ATEED and the China Yachting administration to facilitate collaborative opportunities, such as coaching sailing students. The prospect of developing regular yachting and golfing summer camps in Auckland are also being explored.
ATEED will continue work on formalising a partnership with The Institute of Golf in Albany to attract and provide investment opportunities for high net worth individuals (HNWI) from Asia and the US to leverage Auckland’s golfing assets. Work is also taking place with the Ladies Professional Golf Association (LPGA).
New airline capacity New airlines are to begin arriving in, and operating from, Auckland in Q3 contributing to further increases in visitor nights. The inaugural Hainan Airlines flight will arrive in Auckland on 1 January 2017, and will operate three times a week between Shenzhen and Auckland using an A330 aircraft. Shenzhen, is a major city in the southern Guangdong Province, with a population of 18 million.
ATEED will assist with the Qatar Airways media visit relating to the inaugural flight in February 2017, including media from the UK (managed via Tourism New Zealand).
Cruise As noted above, a resource consent application for the short-term mooring facility is planned to be lodged by Pānuku Development Auckland in March, and will be publically notified.
Kai Collaboration project ATEED’s Kai Collaboration research project is progressing well, with key activity planned for Q3 and Q4. The primary output is a report that will provide guidance on the support the Auckland food and beverage (F&B) sector requires from ATEED to enable future growth. The report will include areas that need to be addressed by ATEED intervention, and will provide a framework by which future initiatives can be guided. In addition to the Auckland Visitor Plan (2012-2021), this project links into other ATEED strategies.
ATEED is working in collaboration with Tourism Industry Aotearoa (TIA) to develop an Auckland food and beverage offering that will be showcased at the TRENZ5 2017 welcome function. Creative Matakana, a week-long event of creative workshops with leading chefs demonstrating food and wine, is also providing support to the food and beverage component of this event, and leveraging the outcomes of the activity, such as imagery and other assets from the event.
Virtuoso
5 Tourism Rendezvous New Zealand (TRENZ), a tourism industry gathering where exhibitors showcase their product offering.
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The president of Virtuoso will visit New Zealand in March 2017 to highlight the importance of sustainable tourism. ATEED is working with the Department of Conservation and Air New Zealand to develop a proposed itinerary for Auckland. The proposed itinerary will potentially include a visit to the Hauraki Gulf islands of Motuihe and Motutapu to participate in a kiwi release programme, and to view tuatara. ATEED hopes to work with Virtuoso to develop a premium programme focused on sustainability and scientific research in the Hauraki Gulf.
ATEED is also planning to establish a Virtual Reality (VR) project with Virtuoso in Q3 that will create VR content about Auckland for training Virtuoso agents in the future. Virtuoso is a privately held, by-invitation-only experiential/luxury focused travel organisation. The foundation for this exclusive network is its membership of more than 335 independent travel agencies with 7,200 elite travel advisors located in 20 countries throughout North and South America, the Caribbean, Australia and New Zealand, who serve the most affluent, well-traveled individuals worldwide.
Major Events ATEED is responsible for investing on behalf of Auckland Council in major events, guided by the Major Events Strategy. ATEED will continue to invest in major events that deliver benefits to Auckland’s economy and brand and major economic and social returns on investment in support of Auckland’s economic development strategy. The Headland Sculpture on the Gulf event returns to Waiheke after a two-year break. The event will run from 3 to 26 February 2017. The Auckland Pride Festival Parade will take place in Auckland on 25 February, the event celebrates New Zealand’s diverse rainbow communities. This year’s event is all about progress and movement, and will celebrate the country’s most outstanding social and cultural achievements. ATEED will also facilitate the annual Auckland Pasifika Festival from 25 to 26 March 2017 at Western Springs.
ATEED will deliver the second Tāmaki Herenga Waka Festival over Auckland Anniversary weekend. The event showcases Māori culture, heritage and kai. Hau Rawiri, Mana Whenua Steering Group Chair and Sir Pita Sharples (ATEED) have been confirmed to speak at the Tāmaki Herenga Waka Festival’s VIP hosting event, which takes place on 26 January.
The 2017 Lantern Festival event, which runs from 9 to 12 February, will see the introduction of the inaugural ASB Lantern Forum, business forum designed to introduce an economic growth aspect to what has traditionally been a cultural anchor event. This is an invitation-only event for 350 guests from ATEED, ASB and Asia New Zealand Foundation’s networks. Auckland Council Strategic Partnerships is developing partnerships for Lantern on behalf of ATEED.
ATEED is working with central government (World Cup’s office within Sport New Zealand) to secure a lead event management provider for the DHL NZ Lions Series 2017 Fanzone on Queens Wharf. The successful supplier will be responsible for planning, developing and operating the Fanzone from shortly before the first All Blacks test match on 24 June until after the last test match on 8 July. Activity will be planned for all test matches, and a Fanzone will be made available throughout this period.
Based on the lessons of RWC2011, which highlighted the need for overflow and contingency planning, ATEED will activate secondary sites to increase capacity and provide regional outreach. The secondary fan sites will only operate on the three test match days and have been booked. They are, Trusts Arena in west Auckland for Saturday, 24 June, the Vodafone Events Centre in south Auckland for Saturday, 1 July and the North Shore Events Centre in north Auckland on Saturday, 8 July. Filming will take place on 19 January with the All Blacks as part of ATEED’s contractual benefits from sponsorship of the DHL NZ Lions Series. The clip will be distributed via ATEED’s social medial channels, as well as the All Blacks and NZ Rugby’s social media channels, and through the Lions Rugby Travel and All Blacks Tours fan databases. In addition, a media story will be developed on the All Black’s favourite three places and activities in Auckland.
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ASB Classic – destination results The ASB Classic returns to the ASB Tennis Area from 2 to 14 January 2017 with women’s tennis star Serena Williams participating. ATEED is working with Serena Williams to shoot a destination video promoting Auckland globally. ATEED will facilitate her visit to a private beach on Waiheke Island, and create a destination press and video release out of this trip, including quotes from Serena on her experience in Auckland. The media release will be distributed domestically via ATEED’s media channels, and internationally via PR Newswire, a global media distribution agency – the first time ATEED has trialled this.
A radio and social media campaign promoting travel to Auckland for the Downer NRL Auckland Nines tournament and Guns and Roses concert went live in December, targeting Auckland’s domestic fly/drive visitor markets. The first of two marketing campaigns will go live in Australia in conjunction with Air New Zealand and Tourism New Zealand, targeting upwardly mobile league fans in Sydney, Melbourne and Brisbane. This is a digital and radio campaign promoting travel to the NRL Auckland Nines using travel partner Sportsnet.
A second campaign will go live in February, which will be run in conjunction with Tourism New Zealand promoting couples travelling to Auckland beyond the NRL Auckland Nines. The campaign uses famous league ‘influencer’ couples, and will involve them sharing the campaign activity via their social medial channels.
In early January, ATEED will host the Fox Sports commentary team to film destination content for the Fox Sports NRL pre-season coverage. This will air in mid-January and preview Auckland and the NRL Auckland Nines as a great weekend getaway.
Six Auckland rugby league clubs will host NRL teams and neighbouring Auckland clubs during an event in the revamped club programme. One of the primary outcomes of the club programme is to enable and support the growth of rugby league at the grassroots level throughout Auckland. Manurewa, Māngere East, East Coast Bays, Mt Albert, Pakuranga and Waitematā rugby league clubs will each host two to three NRL teams at public events in the lead-up to the tournament.
A full schedule of major events is available on ATEED’s website, www.aucklandnz.com
Build a culture of innovation and entrepreneurship
GridAKL – the services There are 12 events in total planned for the month of January. GridAKL will host a group of 35 young people (18- 21-year-olds) taking part in the Venture Up Programme, which is an entrepreneurial accelerator for New Zealand's aspiring leaders being sponsored by ATEED. The group will be able to learn about the GridAKL Innovation Precinct and meet with residents who will share their journeys and deliver presentations on the latest AR/VR projects.
Following a successful incubation of Fonterra’s Disrupt Accelerator Programme in 2016, Fonterra's New Ventures team will join the GridAKL community in January. This team is responsible for managing new venture projects for Fonterra globally. This is a great outcome, as means the growing innovation ecosystem is becoming ever more connected across different Auckland and nation-wide initiatives, and multiple agencies are collaborating and supporting each other to ultimately create a more powerful impact for the benefit of Auckland’s future.
Muralidhar, the Head of People from rapidly scaling Australian start-up Canva will re-join the GridAKL community in January. Muralidhar delivered a presentation to the GridAKL community at the end of January on Recruitment in Start-up Land, and how to think of your employee and operations’ experience as a product. This is part of a BizDojo road trip organised to connect with the innovation ecosystem across the country.
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Lion Foundation Young Enterprise Scheme ATEED will deliver the Young Enterprise Scheme E-Days (Enterprise Days) in February and March 2017. The E- days are held across the Auckland region, to provide students with the opportunity to discover what the 2017 programme entails, and to enable students to test their initial business ideas with volunteer speed coaches.
Attract business and investment
Fintech Detailed meetings will be held with Stone and Chalk and the Muru d incubator and accelerator programmes in Sydney in early February to gain insight into what elements of these programmes and spaces worked, and how their business model was formed.
ATEED will host the Fintech New Zealand Auckland launch event on 9 February in ATEED’s boardroom. This will be attended by 80 approximately Auckland-based fintech companies, and the agenda for the next twelve months of activity was discussed.
Project Palace (Auckland accommodation sector – planned and scheduled construction) ATEED will meet with potential investor representatives in January to discuss opportunities prior to visiting potential sites in late January.
Kumeu film studios site ATEED will continue to progress discussions with key stakeholders about the concept of developing a sound stage at the Kumeu Film Studios site.
Grow and attract skilled talent
Skills
ATEED’s delivery of #BuildAKL continues to achieve positive results. Ten young Auckland jobseekers will commence work in Auckland’s thriving construction and infrastructure sector, having won work placements as part of the #BuildAKL industry recruitment campaign. The winners, aged between 16 and 23 years, were selected from a short-list of 20 finalists. They start their rotational job placements in mid-January. The four-week work experience placements are being managed by recruitment company AWF, with work experience provided by Fletcher Building, City Care, Downer, Hawkins Group, iTraffic and Watercare Services. The ten winners received a free training package from AWF and the Solomon Group, which included the Site Safe passport, traffic control training and training on resilience in the workplace.
Enabling education and talent The Study Auckland team is working with Auckland Council on the Ellen Melville community centre (located in High Street) refurbishment project. The Study Auckland team attended a community workshop run by Council to represent the interests of international students to local stakeholders. Discussions are underway between Study Auckland, Council and The Human Rights Commission regarding how international students based in the inner city precinct can better access local community services. The Citizen's Advice Bureau located in level one of the Auckland Central library receives an estimated 6,000 international student enquiries per annum, including enquiries relating to welfare, legal, tenancy, and health issues. The new Ellen Melville programme could incorporate the servicing of international students by relevant community service providers, as it provides a larger and more flexible space than the library.
A draft operational plan will be workshopped with the Waitematā Local Board in late February, to be followed by a recommendation report due in late March 2017. The centre is due to open in mid-2017.
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Student experience Study Auckland is partnering with Education New Zealand to co-design and launch a new international student experience programme. The purpose of the programme is to ensure that international students make the most out of their time in Auckland, and help high value sectors attract the best and brightest international talent into companies. This project is aligned to the Auckland Agency Group Student Wellbeing programme, and will involve a series of interviews with students, education providers, destination service providers and companies hiring international graduates. The project commences in February 2017.
ATEED is developing a ‘Safety in the City’ video to ensure that international students make the most of their time in Auckland and are aware of some of the pitfalls that new arrivals often encounter. The video covers advice on personal safety, employee rights, and sexual and mental health.
Build Auckland’s brand and identity
Digital Development Project The Digital Development project team will continue to work on the various pages of the new website in Q3 to replace the almost obsolete existing technology. The new website will be on a new digital platform, and have an improved user experience. The project is expected to be finished by the end of Q4.
Auckland Short Break campaign ATEED’s International Tourism Marketing team has partnered with Tourism New Zealand and Auckland International Airport Limited on a Facebook marketing campaign in Australia, promoting Auckland as a short-break destination. The target audience is the Australian leisure traveller located in New South Wales and Queensland, and in Q4, the target audience will shift to Victoria, Australia. The campaign uses the tag line “One city, two worlds”, which showcases Auckland’s urban and natural playground, and aims to show Australians amazing experiences they can have in Auckland on a 3-5 day getaway.
New content for this campaign will be filmed over December and January, and the campaign will be in market from February 2017. This is an equal three-way split of funding, and will be the first time that Tourism New Zealand has run an Auckland-specific campaign in Australia, as well as the first time that ATEED has run a major digital activation in Australia – a key milestone for both parties.
5. Financial performance This report covers the operational performance of the ATEED Group, including our subsidiary, World Masters Games 2017 Ltd (WMG).
At the end of Q2, ATEED's funding from Council is slightly lower than forecast due to lower WMG2017 funding requirement than planned and timing-related underspend across ATEED’s business units.
External revenue is below forecast due to registration revenue from WMG2017 being lower than forecast. Cumulative revenue at the end of December for WMG2017 was 64% against a target of 85%.
Operational expenditure is lower than forecast. The positive variance is due to an underspend of $0.6m in ATEED across multiple projects and activity which has been deferred, in particular Auckland Lantern Festival, Warriors League, GridAKL, domestic and international marketing tourism campaigns, trade partnership activity and the cancellation of the Auckland Partner Programme. WMG2017 spend is lower than forecast by $0.5m, due to the lower costs as a result of slower sales.
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Capital expenditure relates mainly to the fit-out of the Lysaght Building for GridAKL. This spend is lower than budget due to the timing of the construction work on Innovation 5A. There is however no change to the expected date of the opening of Innovation 5A, which remains as July 2017.
Financial Performance for the Period Ended 31 December 2016
Variance Full year $'m Actual Forecast f/(u) budget
Operational
External Revenue 10.4 12.4 (1.9) 19.6
AC Funding 19.1 19.9 (0.8) 56.2
Operational expenditure excl. depreciation 29.8 30.9 1.1 75.8
Depreciation 0.4 0.4 0.0 1.2
Capex
Expenditure 1.4 3.9 2.6 7.9
AC Funding 1.4 1.8 (0.5) 7.9
6. Performance measures As at 31 December ATEED is on track to achieve 17 of its 24 targets set out in the Statement of Intent (2016-19). Five targets are measured on an annual basis and ATEED anticipates that these will be achieved by the end of the year. We are currently applying mitigations to address shortfalls in the number of intensively account managed customers in ATEED’s aftercare programme (Aroha Auckland), as well as the number of International bids submitted or supported by ATEED. Although the number of bids submitted/supported is below target, the value of business event bids won during this financial year is expected to exceed target.
Key highlights to date:
Build a culture of innovation and entrepreneurship
. The resident population of GridAKL is 76, approximately 85 per cent of these businesses are considered ‘innovation led’. . A new SOI KPI measure was set for 2016/17, defined as “number of individual entrepreneurs supported through an ATEED delivered or funded entrepreneurship programme”. Latest results show that 1975 individuals have already been supported, exceeding the target of 1500 for the year.
Attract business and investment
. As at 31 December ATEED had effected deals with a contribution to GDP of $255 million, exceeding the SOI target of $56.7 million.
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. As at 31 December ATEED had effected $387 million of investment deals, exceeding the SOI target of $278 million. . ATEED has facilitated the establishment of three significant multinationals during the year-to-date, and is on track to achieve the annual target of five by 30 June 2017. Two of the multi-nationals newly established are in the construction sector, with the remaining one from the screen sector. . The number of intensively account-managed customers in the Aroha Auckland programme stands at 32, with a risk of not reaching the target of 85 by 30 June 2017, based on the tighter qualification criteria now being applied. ATEED will be engaging with 27 clients who are currently part of the Aroha Auckland programme in February, with the expectation that the annual target will be met.
Grow and attract skilled talent
. The number of ‘live’ signatories to the Auckland Youth Employers Pledge stands at 58. The SOI target requires ATEED to maintain a pool of 50 signatories.
Grow the visitor economy
. Customer satisfaction with the provision of visitor information through i-SITEs continues to be exceptional. The satisfaction rate sits at 95.3 per cent year-to-date, well above the 85 per cent target for the year. . Contribution to regional GDP from major events invested in has now risen to $10.33 million, and with several large scale events on the way in the first half of 2017, is well on the way to reach target. . Spend by visitors to Auckland has previously been an annual measure, however it is now available on a monthly basis as well. Auckland has seen significant growth in visitor spend, which stood at $7.4 billion to the end of November 2016. This was an increase of 8.6 per cent from $6.9 billion for the year-end November 20156. Latest numbers are delayed due to the recent Wellington earthquakes. . The Auckland Convention Bureau has achieved an 86 per cent win ratio in the year-to-date, against a target of 60 per cent for the year. . 14 international business events bids have been submitted or supported this year. This KPI is tracking below its annual target of 35. However ATEED has almost achieved the KPI for “estimated value of the business events won”. At the end of Q2 the value achieved was $18 million, marginally below ATEED’s target for 2016/17 of $19m. The annual target will be achieved by the end of Q4.
Build Auckland’s brand and identity
. Visits to www.aucklandnz.com continue to track strongly with 4.4 million visits (page views) as at 31 December, already exceeding the annual target of 3.4 million.
6 Please note, the 2016 figures are MBIE estimates and are subject to revisions when the data is finalised in October 2017
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Date of Annual Target to ATEED SOI KPIs Measurement Measure/latest Latest Result 30 June 2017 Status Build a Culture of Innovation and Entrepreneurship No. of businesses taking up tenancy at GridAKL (cumulative) and Number & (%) 31-Dec-16 76 (85%) 55 (70%) percentage "innovation-led" 1 Number of individual entrepreneurs supported through an ATEED Number 31-Oct-16 1975 1500 delivered or funded entrepreneurship programme Percentage stakeholders satisfied with provision of business advice, start-up, training & mentoring programmes (LTP Measure) % 30-Jun-16 91 85
Number of actively managed business through Regional Business Number 31-Dec-16 383 720 Partner programme No. businesses that have been through an ATEED programme or Number 30-Jun-16 4073 1500 benefitted from an ATEED intervention (LTP Measure) No. Maori businesses that have been through an ATEED programme Number 30-Jun-16 157 100 or benefitted from an ATEED intervention (LTP measure) Attract Business and Investment Facilitation of the establishment, or significant expansion, of Number 31-Dec-16 3 5 multinational and local companies in target sectors (LTP Measure) Number of intensively account managed customers in ATEED Number 31-Dec-16 32 85 Aftercare programme (Aroha Auckland)
Total GDP contribution of deals effected with ATEED involvement $(million) 31-Dec-16 255.4 56.7 Value of investment deals effected by ATEED within the financial $(million) 31-Dec-16 387 278 year Grow a Skilled Workforce Number of ‘live’ signatories to the Youth Traction Hub Employers Number 31-Dec-16 58 50 Pledge (LTP Measure) Growth in value of international student spend to Auckland $(billion) 30-Jun-16 2.1 1.888 Grow the Visitor Economy Spend by visitors in Auckland 2 $ (million) 30-Nov-16 7420 5,412 35 Number of international business event bids submitted or supported Number 31-Dec-16 14
Business event bid win/loss ratio (based on results received in % 31-Dec-16 86% 60% financial year) 3 Value of business event bids won in financial year $ (million) 31-Dec-16 18 19 Percentage of customers satisfied with visitor information centres % 31-Dec-16 95.3 85 and services overall (LTP Measure) Contribution to regional GDP from major events invested in (LTP $ (million) 31-Dec-16 10.33 86 measure) 4 Percentage of Aucklanders who agree events make Auckland a great % 30-Jun-16 73 80 place to live (engender pride and sense of place) Visitor nights generated by major events invested in 5 Number 31-Dec-16 89,410 415,000 Percentage of customers satisfied with delivered major events (LTP % 31-Dec-16 90% 85 measure) Build Auckland’s Brand and Identity Total visits to www.aucklandnz.com (LTP Measure) Number (million) 31-Dec-16 4.4m 3.4m Local Economic Development Percentage of actions in ATEED Local Board Engagement and Action % 30-Aug-16 86 80 Plans completed Mana Whenua Engagement Establish Percentage Mana Whenua satisfaction with quality of engagement % 31-Dec-16 N/A baseline
Key: On track / Target exceeded Off-track Potential for Slippage No recent result
1 Innovation-led is defined as businesses developing new or improved technologies or services
2 From 2016/17 targets have reset to align with latest Ministry of Business, Innovation and Employment Monthly Regional Tourism Estimates (MRTEs) 3 Calculated as wins divided by wins + losses. Does not account for bids pending, not proceeded with, cancelled or not submitted 4 Target includes the impact of World Masters Games 2017 5 Target includes the impact of World Masters Games 2017. Targets for visitor nights generated by major events reflect the targets originally endorsed by council through the Major Events Strategy. It has since become apparent that these targets are low and ATEED aims for significantly higher KPIs internally. Refreshed target will be developed for 2017/18.
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7. Māori transformational shifts activities During Q3, ATEED will work to refine the reporting of activity for the Te Toa Takitini programme.
How it contributes to Māori Progress over Q2 outcomes To significantly lift Māori Procurement – (Whai Rawa Project): economic well-being, and ATEED is a part of wider Auckland Council discussions supporting the enable and contribute to increase of the contract value awarded to Māori businesses (direct and Māori economic needs and indirect). aspirations through activities that target: tribal development whanau well-being Māori business sector development.
Grow Māori business Whāriki Māori Business Network capability and economic Whāriki events have been relatively informal with nine network events hosted by prosperity various corporate entities (at their own cost) to encourage
whakawhanaungatanga amongst the Māori business community.
ATEED has provided administrative support, and now has a database of more than 280 members (up from 200). As a result, a more formal network structure will be established to help strengthen Māori business networks. In December, ATEED facilitated the design and development of a logo for the network utilising an emerging new Māori designer. ATEED is also coordinating the development of 10 promotional videos. Participants have been selected from the network who have successfully launched and managing their own business.
A full schedule of Whāriki events has been planned for 2017. Hosting organisations include GridAKL, Boffa Miskell, ASB, Air NZ and Auckland University Business School. ATEED is hosting the network during WMG2017 and DHL NZ Lions Series. Planning for these events is underway and significant focus will be on showcasing the Tāmaki Makaurau Māori business economy both domestically and internationally.
ATEED will continue to facilitate the growth of this network as it will encourage a vibrant culture of Māori business success and allow a co-ordinated business support infrastructure within the Tāmaki Makaurau Māori business environment.
ATEED Māori Economic Development Strategy
The ATEED’s Māori Economic Development Strategy for 2016-2019 has been finalised. The strategy will be implemented through the Māori Growth Programme, and includes the contracting of a new Growth Programme Specialist and Industry Development Co-ordinator in December.
Māori Economic Growth Forum
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How it contributes to Māori Progress over Q2 outcomes ATEED will build a Māori procurement strategy working with Auckland Council, Te Puni Kokiri and some of our corporate partners, such as Westpac and Air New Zealand. This is a new initiative to connect and support Māori businesses tendering and securing contracts with large corporate organisations. Phase one, which runs until the end of Q3, is to develop a business case, identify availability of tenders, consolidate Māori business network, sector development and tender categorisation.
Matariki Awards and Māori Business Leaders Awards ATEED plans to sponsor these events in 2017 to showcase Māori success within Tāmaki Makaurau. An opportunity to segue DIGMYIDEA finalists (ATEED guests at the event/s) into corporate environments and business networks.
Emerging Māori Leaders Programme ATEED continues to support Te Wharehukahuka’s ‘Ka Eke Poutama’ programme which focuses on preparing rangatahi/youth into governance and leadership roles. In addition, ATEED will sponsor the Māori Women’s Development Incorporation (MWDI) to deliver the 2017 ‘Te Wero Pakihi’ programme, aimed at inspiring more Māori youth into business and entrepreneurship roles. A review of the 2016 programme and 2017 sponsorship proposal will be conducted in Q3, with delivery of the 2017 programme expected to take place in Q4. ATEED is also working with MWDI to set up an Auckland office within the ATEED Quay Street building to provide support to a programme that concentrates on Māori women entrepreneurs.
Rangatahi Advisory Panel
With the highest percentage of Māori youth living in Tāmaki Makaurau, ATEED will engage a panel of rangatahi to provide advice on youth initiatives to support project delivery of the Māori Growth Programme, and align with other youth programmes within the organisation such as JobFest and the Youth Enterprise Scheme. The selection process for the panel will be held in February, with the expectation that the panel will meet monthly.
E Tipu, E Rea – sector capability The 2016 Māori Business Growth Workshop focused on construction, trades and professional services, ATEED has identified a further three sectors to focus and build capability on in 2017. These are: • Food and beverage • Creatives • ICT/Digital
A capacity report will be commissioned by ATEED to identify what needs and gaps there are within the sectors. This will then enable activity within these sectors to be focussed and aligned with the ATEED Māori Economic Strategy.
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How it contributes to Māori Progress over Q2 outcomes Food and beverage: The initial phase of this work will be the commission of a capacity report by ATEED’s Māori Growth and the Business Innovation and Skills teams to identify what the requirements are within the food and beverage sector. This includes looking at other successful business models for community development such as La Cocina (https://www.lacocinasf.org/). Phase 2 will be carried out in Q4, and will look at the possible development of an Indigenous Food Incubator in South Auckland. A multi-organisational approach will be utilised to ensure duplication is avoided, and ATEED will be working closely with the Southern Initiative team in Q3.
Creative Entrepreneurship Programme: Preliminary discussions have taken place with the Arts Regional Trust regarding sector development. The priority during the first half of 2017 will be sector research and to develop a strategy to best support and advance Māori entrepreneurs within this sector.
DIGMYIDEA The 2017 DIGMYIDEA Māori Innovation Challenge will be launched on 20 February, with applications closing on 31 March. DIGIwānanga will take place during Techweek 2017 (13-14 May) at MIT in South Auckland. The purpose for the Challenge is to enable Māori the opportunity to submit an innovative digital business idea that has the potential to go global. The Challenge aims to grow Māori involvement in the digital economy.
During Q2, the marketing and communications plans for the event were developed and the roll-out of the campaign will take place the week starting 6 February.
ATEED has submitted a sponsorship proposal to MBIE as a financial partner, aligning key objectives specifically encouraging Māori youth getting involved in the digital sector. Callaghan Innovation, NZTE and Poutama Trust have all expressed support of the programme, and will assist in the supply of mentors, judges, guest speakers and merchandise. All five organisations are working together to develop a business start-up package and networks for all ten finalists.
Celebrates and showcases The 2017 Tāmaki Herenga Waka Festival will take place on 28 – 30 January, Māori culture and provides a at the new location of the ANZ Viaduct Events Centre and on-water at the vehicle to leverage Māori Viaduct Basin. business and investment opportunities A VIP hosting event will be held on Thursday, 26 January at the Auckland Art Gallery. Guest speakers will include Hau Rawiri (Mana Whenua Steering Group Chair) and Pita Sharples (ATEED).
The festival programme will include both on-land and on-water based activities which celebrate Māori culture through music, kapahaka, weaving, carving, traditional Māori healing, iwi storytelling and Māori games. The Marketplace showcased Māori kai and craft.
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How it contributes to Māori Progress over Q2 outcomes Sponsors include Air New Zealand, Te Wananga o Aotearoa, Māori Television, Media Works and Mai FM.
Tourism business Māori tourism operators (engagement and support) development opportunities for locals and iwi New operators’ enquiries 1. In Quarter 2, ATEED met Chris Kumeroa to discuss his Special Forces experience. Chris was provided with ATEED’s tourism toolkit and introduced to ATEED’s Māori Economic Development programme. He will provide support and guidelines around stronger business case writing. 2. ATEED connected with the owners of Campable, a platform for businesses to display available parking spots for tourists with motorhomes and campervans. ATEED will support Campable to connect with mana whenua and marae in Auckland to use this platform to support their economic and tourism interests.
Existing operators 1. ATEED connected with Tamati Ihaka, the owner of Heikura into Auckland's AR/VR Garage. 2. ATEED provided an opportunity for Navigator Tours and Ngati Whatua Orakei to take part in the activities linked with the Ovation of the Seas cruise ship visit.
Famils ATEED and The Southern Initiative Mana Whenua Famil with Ngati Whatua ki Kaipara. This famil will provide other mana whenua in Tāmaki Makaurau with an opportunity to learn about and share iwi tourism insights and visions. Originally the famil was planned for November but was postponed due to bad weather. A new proposed famil date is 25 January.
Iwi / Mana Whenua engagement support Tourism focused marae audit 1. ATEED is gathering information to identify marae interested in engaging with the tourism industry. Previous marae audits done by TWA and IMSB will be used as a basis for this project. 2. ATEED has contacted ISMB to schedule a meeting to discuss the findings of their research with Auckland marae. 3. ATEED’s Māori Economic Development and Tourism teams will work together on the marae audit project to analyse the findings and understand the wider economic aspirations and opportunities for marae in Auckland.
Transport link 1. ATEED continues to support the pilot project to establish a direct transport link from the CBD to attractions in north-west Auckland for international visitors. Initial results suggest there has been a low uptake
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How it contributes to Māori Progress over Q2 outcomes of the transport link due to a lack of awareness and promotion. ATEED is working with the North West District Business Association to promote the transport link.
2. Hunua Ranges Cycleway ATEED is working with James Brown, Chair of Ngai Tai ki Tamaki, to secure meetings with representatives from Ngati Paoa, Ngati Whanaunga and Ngati Tamaoho.
Communication and marketing opportunities 1. The Tāmaki Makaurau Māori Tourism Newsletter showcases Māori tourism activity and is emailed quarterly to industry contacts and stakeholders. There will be newsletters in February, May, August and November 2017. ATEED is collating a range for stories for the next newsletter.
2. Māori tourism operator promotional video. A Māori production company (Whanau Marama) was engaged to undertake the filming and production of a video profiling the region’s Māori tourism operators. The video will be delivered by the end of January 2017.
Events and networking 1. Tāmaki Herenga Waka Festival ATEED, in partnership with New Zealand Māori Tourism, has a booth space for the festival. ATEED is liaising with internal and external partners to activate the space with Tamoko printing and space for operators to come in display their tourism experiences and engage with festival participants. Discussions continue with The Maunga Authority to be involved in the space.
2. The World Indigenous Tourism Alliance (WINTA) (Indigenous Tourism Conference) New Zealand Māori Tourism announced that the next WINTA conference will be held in Waitangi. ATEED will help Auckland-based operators and mana whenua to attend and be involved in the conference. This will offer opportunities for delegates to connect with the international trade community. ATEED will also use this opportunity to promote the Northland to Auckland link.
3. TRENZ ATEED has confirmed it will be representing and supporting three operators to attend TRENZ 2017 (Navigator Tours, Heikura and Te Haerenga). ATEED is working with TRENZ to support the welcome event, food and beverage offering as well as famils to ensure Māori culture is an integral part of the conference. 4. Les Clefs d'Or ATEED continues to support the New Zealand Hotel Concierge Society (Les Clefs d'Or) which held its annual 'Meet the Region' trade event in November at the Grand Millennium Hotel. Approximately 100 staff from
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How it contributes to Māori Progress over Q2 outcomes primarily Auckland hotels converged that day to meet network with 50 suppliers representing the Tāmaki Makaurau, Northland and Rotorua regions. The event provided a great platform for ATEED to connect and collaborate with the society and to showcase Tāmaki Makaurau tourism proposition.
5. Future Insight Workshops These aim to build capability of Māori operators with an invited guest who provides tourism-specific insights to attending operators. The last workshop was postponed until early 2017.
Auckland/Northland Collaboration - City to Cape ATEED, Northland Inc and NZ Māori Tourism supported an application to the Airport Fund led by TIME Unlimited to promote 12 Auckland and Northland Māori Tourism operators to create itineraries that showcase Māori stories/themes. This provides an opportunity for Auckland Māori tourism operators including Te Haerenga, Tāmaki Hikoi, Waka Quest, Te Hana, TIME Unlimited and Tāmaki Paenga Hira (Auckland Museum) to create a proposition that travel trade can support. ATEED continues to support this initiative. In collaboration with Northland Inc, ATEED will contribute $5,000 towards this initiative. An MoU between Northland Link and ATEED is currently being drafted by TIME Unlimited Tours.
ATEED Māori ATEED’s Māori Responsiveness Advisory team met twice in Q2. The team gave Responsiveness Plan presentations to all business units to remind staff about the content of the Plan. Presentations were followed by a workshop asking team to reflect on their contributions towards the Plan and to identify ways of improving its implementation. Staff at ATEED will be offered an opportunity to take part in a six weeks’ Te Reo Māori, scheduled to start in Q3 (One hour per week).The aim of the course is for participants to become comfortable in pronouncing and introducing themselves in Te Reo Māori, learn about hui protocols and more. The course is part of ATEED’s commitment to promote Māori responsiveness in our current and future activities.
8. Key local board activity At the time of preparing this report ATEED has submitted its six-monthly reports to local board for the period 1 July to 31 December 2016. These reports provide individual local boards with highlights of ATEED’s activities in their local board area. The information in the table below contains only key activity in some of the local board areas.
Initiatives Comments
ATEED’s dedicated Local Economic Development (LED) team works with local boards Economic growth who allocate Local Development Initiative (LDI) budget to economic development activities. The LED team delivers a range of services7 such as the development of
7 This activity is subject to local boards prioritising local economic development, and subsequently allocating funding to local economic development through their local board agreements.
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Initiatives Comments proposals, including feasibility studies that enable local boards to directly fund or otherwise advocate for the implementation of local initiatives.
The Uptown Innovation Hub, a partnership between ATEED, Uptown Business Association, the Waitematā Local Board and Auckland Transport, has marked an important milestone in its development with the appointment of a Hub Manager, Gill Plume. A primary focus of the role will be to integrate the activities of the AR/VR Garage and other Hub residents, as well as connecting with the GridAKL programme. ATEED will continue its close working relationship with project partners and support the new Hub Manager in every way possible.
A number of local boards have contributed funding towards the Young Enterprise Scheme E-Days in Q3, which ATEED supports and delivers.
A regular Major Event 2017 programme update was emailed to all local board members and all business associations and business improvement districts in September. The update focused on World Masters Games 2017 (WMG2017) and the New Zealand Lions Series components of the 2017 programme, which included information on the potential city dressing campaign, temporary accommodation requirements, and potential promotional channels.
A heat map was produced and provided to the local boards that showed the expected WMG2017 participant and visitor flow in each of the local board areas to help shape any Major Events local leverage planning.
Eight local boards have put aside over $100,000 (collectively) for local leveraging of the Major Event 2017 programme. This has provided a number of opportunities for different initiatives.
ATEED also facilitated a WMG2017 briefing in September to the Auckland Deaf Society. Jennah Wootten (Chief Executive, WMG2017) presented a high-level overview that was well-received. There was strong interest in volunteering and participation in the games with accessibility at the core of discussions.
In September, ATEED’s Destination Development team convened the latest in the series of six-monthly tourism networking events. The event was attended by 90 tourism industry representatives from across the region. The aim of these events is to update attendees Tourism on ATEED’s activities, as well as the opportunities for local businesses and regions to leverage ATEED activities. Tourism networking events are hosted in different parts of the region. The September event was held at Auckland Zoo.
Local board engagement The focus for ATEED‘s primary points of contact over the past quarter has been on supporting Auckland Council’s Local Board Services team with the induction phase of local boards, following local body elections held in November 2016. In addition to this and associated early planning activity, ATEED was represented at various planning sessions, workshops and Māori Responsiveness workshops for the local boards.
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In February, ATEED will participate in local board induction sessions delivered on a cluster basis, as well as a symposium to connect the Chief Executives of the CCOs with all Local Board members.
9. Risk management Health and Safety: ATEED’s H&S routines are constantly being embedded into our day-to-day activities. ATEED continues to achieve a number of significant improvements as we work towards implementing a best practice H&S management system.
Some key changes to date include transitioning from Vault to Risk Manager as a reporting system, updating standard operating procedures, and producing a single Site Specific Safety Plan that all physical works contractors must complete.
Portfolio Risk: A number of risks and issues were actively managed. We finish the quarter with one high level issue being managed, namely ATEED working with the Mayor and Councillors to ensure we review and successfully adapt to Council’s changing priorities. An updated Risk Framework has been independently reviewed, resulting in a Risk Appetite document due to be developed. The Risk Appetite document will be closely linked to ATEED’s strategy direction and key objectives.
Risks and issues managed during the quarter include: . GridAKL and Mason Brothers: Developing positively, the properties are being marketed by Colliers. Mason Brothers was recently the subject of a positive article in the Herald. . ATEED website: The current website is unstable, running on an obsolete and unsupported platform. The new website development suffered delays, however after an independent review, is back on track and expected to be delivered by Q4. There was a period of intense media scrutiny on the Global Auckland programme, which impacted ATEED’s reputation. The project was completed and the next phase has moved to Auckland Council’s Strategic Partnerships team, supported by ATEED staff from Corporate Partnerships and Marketing. . For the last few months of 2016, there was significant work pressures. Some staff were working excessive hours, with considerable external pressure on the Executive. . Lower Queen Street i-SITE: A temporary move of the i-SITE while more suitable permanent accommodation is found is causing noticeable disruption to i-SITE staff and solutions are being actively sought. . Registrations have fallen below WMG2017 aspirational target to secure 85% of registrations by the end of Q2. Management remain confident that the target will be achieved as WMG2017 have contingency plans in place to manage this issue.
Internal Audit: ATEED continues to utilise KPMG to carry out business reviews as directed by Internal Audit. We continue to work closely with Council Internal Audit as their capability is developed to identify how this might be deployed. . The GridAKL and Major Events audits have been completed, with positive interim findings (reports yet to be finalised). . The 2016/17 Audit Plan is continuing to be reviewed, with a Project Management Office review commencing in Q3.
External Audit: Audit New Zealand letter of engagement for the half year has been completed, and they started their onsite review in December 2016.
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Panuku Development Auckland Quarterly Report
Quarter ended 31 December 2016
CCO Governance and Monitoring Committee
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 1 of 20 Table of Contents
1. Executive Summary ...... 3 2. Strategic issues and focus areas ...... 3 3. Highlights for the quarter ...... 4 4. Future outlook ...... 5 5. Key Deliverables ...... 6 5.1 Key deliverables for next quarter ...... 8 6. Development Budget and Strategic Development Fund ...... 10 7. Financial Performance ...... 11 8. Key performance measures ...... 14 9. Annual performance measures ...... 15 10. Contribution to Māori outcomes ...... 17 11. Key Local Board issues ...... 20 12. Risk Management ...... 20
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 2 of 20 1. Executive Summary
This report summarises the performance of Panuku Development Auckland in the second quarter of 2016/17.
Panuku has a clear programme of work in its major Transform and Unlock locations. A key focus moving forward will be on delivery of smaller projects that can be delivered quickly on the ground.
This quarter saw some important development agreements signed for sites in the City Centre and in Flat Bush. These projects will deliver over 250 residential units for Auckland.
Panuku is making good progress to achieving its key performance indicators, as outlined in Section 8 of this report.
Financially, Panuku’s net surplus is in line with budget and capital expenditure is forecast to be below budget. More explanation of the financial performance is provided in Section 7 of this report.
2. Strategic issues and focus areas
Good progress has been made in Panuku’s priority development areas, with High Level Project Plans being worked on for Onehunga, Papatoetoe, Avondale and Henderson. In Manukau and Northcote, leading on from the Council’s approval of the HLPP, Framework Plans (which are more detailed plans on the development of the locations, including reference plans for each development site) have been developed.
Often it is the smaller projects that can make a huge difference in a community over a relatively short period – the placemaking activities, the development of public space, or the optimisation of Council properties. Panuku is identifying these projects, and a key focus will be on delivering more of these projects within the locations that we work.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 3 of 21 3. Highlights for the quarter
• Sir John Wells ended his term as Chair in November. Sir John has had a long association with the Council family, including being Chair of ACPL prior to its amalgamation into Panuku. Richard Aitken was appointed Chair to replace Sir John.
• Roger MacDonald was appointed as the Chief Executive of Panuku, and he started in the role in November. Roger originates from the United Kingdom, and has delivered large scale urban redevelopment projects across the world, in Africa, the Middle East and in the UK.
• Panuku started working with New Zealand Housing Foundation and mana whenua in a consortium to investigate the development of a 220 home residential site at Barrowcliffe Place in Manukau. The site presents an opportunity to develop good quality affordable housing in partnership with iwi.
• The first tenants have moved into the Mason Brothers building in the Wynyard Quarter. The building is part of stage one of Precinct Properties’ programme of developing the commercial sites in the Wynyard Quarter. The development of 12 Madden Street, which ATEED have taken the head lease for the establishment of Grid AKL, will be completed in July 2017.
• Stage Two of the Hobsonville Airfields Development was tendered, and a preferred tenderer has been selected after a number of tenderers submitted strong bids. The due diligence process is underway. The 9.9ha site will see 500 homes of mixed typology constructed.
• Lot 1, 187 Flat Bush Road was also tendered and a development agreement has been signed. 30 homes will be constructed on the 1.9 hectare site, with construction commencing within a year of the sale.
• The ASB Waterfront Theatre was opened on 22 September 2016. Panuku (on behalf of Council) provided the site, contributed to the funding and provided design review and oversight for the project. The theatre is a key component of the activation of the Wynyard Quarter.
• The Water Edge Symposium was held in November, with invited waterfront experts attending from the USA, Asia, Europe and the Pacific. As well as discussing international case studies, the symposium workshopped ideas about how to develop the Onehunga/Manukau harbour water edge, and this thinking is feeding into the planning for the Onehunga Transform project.
• The Silo Park Summer Programme has seen thousands of people visit the waterfront over the summer period, to enjoy the night markets, catch movies at the Silo cinema,
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 4 of 20 and enjoy the various forms of entertainment on offer, cementing the waterfront as the place to be in Auckland over summer.
• After an audit of Panuku against ACC’s Workplace Safety Management Practices external accreditation, Panuku attained Tertiary standard, reflecting its commitment to continual improvement in health and safety.
4. Future outlook
• The joint venture between the Council and The Selwyn Foundation (JVCo) to manage the Housing for Older People portfolio and tenants is being formalised with legal agreements being negotiated and Community Housing Provider registration being prepared. JVCo will take over the management of the Housing for Older People portfolio in July 2017.
• The lease of Panuku’s office accommodations expires in mid-2017. Options are being considered, and it is likely that it will be more cost effective for Panuku to move to a modest-quality building in the CBD rather than remaining in its current building.
• Tawera Group is marketing residential apartments to gather pre-sales for the redevelopment of the Civic Administration Building, which is part of the Civic Quarter development. This follows on from the signing of the Development Agreement between Panuku and the Tawera Group.
• Panuku is working on a refresh of the Waterfront Strategy, which will frame future development within the CBD waterfront area. This work will be reported to the Council in March 2017.
• Panuku has been reviewing how to improve the transparency of its Board meetings and interactions with the media. Panuku will hold as many of its monthly board meetings in the open as possible. A public-excluded session will be held at each meeting to discuss confidential matters. Agendas for each meeting will continue to be posted on the Panuku website (panuku.co.nz) prior to the meeting. Board papers (with confidential information redacted) will also be posted online. Members of the public will be invited (via the Panuku website) to present to the Board on issues relevant to Panuku. All media enquiries will be responded to in a timely fashion and all information is shared with the media unless it is of a confidential nature. Panuku’s major projects are outlined on our website and all key documents (such as our Annual Report and the project plans for our development locations) are available online.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 5 of 20 5. Key Deliverables
The key projects currently being delivered are:
Deliverable $’000 Completed/ Status Comments carry over YTD to next CAPEX/ quarter/ OPEX deferred Actual TRANSFORM • Transform $747k carry over The Manukau Framework Plan was Manukau – (OPEX) to next approved by the Panuku Board in quarter December 2016.
• Panuku continues to make progress Barrowcliffe $126k with a consortium led by New Place (CAPEX) Zealand Housing Foundation (a community housing provider) and involving mana whenua to deliver an affordable housing pilot project at Barrowcliffe Place for around 220 dwellings. • Transform $350k carry over The Onehunga High Level Project Onehunga (OPEX) to next Plan (HLPP) was approved by the quarter Panuku Board in November 2016. • In September 2016, Auckland Council’s Chief Executive entered into an agreement in principle to sell Onehunga wharf to New Zealand Transport Association (NZTA) for the duration of the East West Link project. The agreement is that NZTA will sell the wharf back to Auckland Council, via Panuku. Project timeframes indicate that the Wharf could be realised back to Panuku by 2022. • Transform $4,628k carry over Pakenham Street (between Beaumont and Daldy streets) Wynyard (CAPEX) to next Quarter – quarter opened 22 December 2016. (Public Project) • The construction of Pakenham Street (between Beaumont and Madden & Halsey) is progressing on track Pakenham St despite the rescheduling of program Upgrade due to significant delays in the Auckland Transport led Halsey and Gaunt street roading project.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 6 of 20 • Westhaven $ 6k carry over The Board approved a revised Marine Centre to next scheme for the northern portion of (CAPEX) quarter the site in August 2016. This includes ground floor commercial space of 1,400 m², office of 700 m² along with associated landscape works. A project manager has been assigned.
• Hobson Wharf $ 785k carry over Stage 1 repairs to the concrete remediation to next beams and piles lying underneath (CAPEX) quarter Hobson Wharf now completed with one concrete pour left to do. • The work has paused to allow commercial tenancies operating time over summer. Remaining works to commence in April 2017.
UNLOCK • Takapuna – $285k carry over Auckland Transport has commenced to next work to assess the long term parking Gasometer (OPEX) quarter needs of central Takapuna. The key Site, to unlocking the development Northcroft St. potential of the Anzac car park and and Gasometer car park is by agreeing with Auckland Transport the 40 Anzac St. number of car parks to be accommodated on the two sites as part of their development. • The Airfields, $6,337k carry over The marketing of Airfields Residential Mega Lots 2, 3, 4 to find Hobsonville (CAPEX) to next Point quarter a development partner have concluded and the evaluation and due diligence process is underway. • The construction of the first stage of the roading network for residential Mega Lot 1 continues. Practical completion for Roads D & E was received on the 25 November. This will enable the stage one subdivision incorporating 102 homes to be built by AV Jennings. • Northcote $538k carry over The Northcote Framework Plan was approved by the Panuku Board in Town Centre (OPEX) to next quarter November 2016.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 7 of 20 Ormiston $87k carry over 66 Flat Bush School Rd (Ormiston SHA) Town Centre to next (CAPEX) • The Master plan has been approved quarter (Partner: Todd and the development agreement Property) has been declared unconditional. Resource consent for stage 1 lodged. Ormiston Town Centre • Construction of residential Blocks A & B are continuing.
Papatoetoe $219k carry over Shopping Mall Town Centre (CAPEX) to next • Construction has commenced on quarter the Papatoetoe mall refurbishment. The work will be undertaken in two stages for a total duration of 12 months. Supermarket • The land title for the Supermarket is going through regulatory approval and is expected to be issued next quarter. The car park works is also awaiting engineering plan approval. Tavern Lane • The site was marketed through a tender process. No acceptable Tenders have been received to date. Discussions with interested parties are continuing.
5.1 Key deliverables for next quarter
Deliverable Comments TRANSFORM • Transform Manukau – Analysis of the offer presented by New Zealand Housing Foundation and report to the Board on the Barrowcliffe Place feasibility of the offer and a recommendation on a way forward. • Undertake an assessment of the Barrowcliffe consortium process to identify key lessons to be applied to future opportunities. • Transform Onehunga Onehunga HLPP to be presented to council’s Governing Body for endorsement in March 2017. • The Panuku Executive is awaiting a draft Memorandum
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 8 of 20 of Understanding (MOU) from NZTA. • A potential acquisition within the town centre to be reported to the Board and ongoing progress on the implementation plan and business case. • Transform Wynyard Quarter - Pakenham Street (between Daldy and Halsey) forecast Madden & Pakenham Street to be opened 31 March 2017. Upgrade • Westhaven Marine Centre Undertake pre-leasing and cost testing for the revised scheme to secure final tenant requirements and proceed with work on the resource consent. UNLOCK • Takapuna – Panuku is working with AT to reach agreement on Takapuna central carparks. Gasometer, Northcroft St. • Continue with implementation planning which and 40 Anzac St envisages commencing with the development of the Gasometer Site. We are anticipating commencing the EOI/RFP process later in 2017. The same process will follow for the Anzac Street site once certainty on the delivery of replacement car parks is in place. • The Airfields, Hobsonville Residential Mega Lot 2, 3, 4 – Complete evaluation and Point due diligence process and to conclude a development agreement.
• Continue construction of key roading infrastructure network. • Project team to work through the vesting process for Roads D & E. • Ormiston Town Centre Continue construction of residential Blocks A & B • 66 Flatbush Road – Resource consent for stage one (Partner: Todd Property) lodged awaiting issue of consent, expected March 2017. • Papatoetoe Town Centre Shopping mall – continue Papatoetoe Mall refurbishment over the next 12 months.
• Supermarket – commence car park works next quarter. • Tavern Lane – continue marketing for a purchaser / developer. • Papatoetoe HLPP to be presented to the Panuku Board for approval next quarter.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 9 of 20 6. Development Budget and Strategic Development Fund
6.1 Development Budget
In 2014/15 Council approved a $5m annual budget (before deferrals) sourced from property sale proceeds to cover investigatory activities and value-adding capital works on properties prior to development or sale. The 2016/17 budget has been split between $5.6m for operational expenditure (includes inflation) and $3.6m for capital expenditure.
$000 Full year Forecast *Committed Actual Budget to projects Expenditure
Development RAG Expenditure *
Development capital 3,644 3,644 2,604 1,438 expenditure Development operating 5,616 5,616 6,188 2,434 expenditure
The committed capital expenditure relates to value add activities for 23 projects. These include site decontamination, building demolition, subdivision, preliminary design, vendor due diligence and infrastructure such as water reticulation. Committed operating expenditure to date relates to 26 projects and includes High Level Project Plans and Framework plans work which is not capitalisable.
6.2 Strategic Development Fund
$000 Full year Actual Comments Budget YTD
Strategic RAG Development * Fund Development 24,358 186 The majority of the annual budget was capital planned for the purchase of the expenditure Onehunga Wharf from Ports of Auckland Limited. This land will be used by NZTA to complete the East West motorway. At the completion of the roading project the remaining site will be on sold to Panuku for redevelopment.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 10 of 20 The Strategic Development Fund will potentially be used in other Panuku projects. There are a number of potential purchases subject to approval through business cases.
The Strategic Development Fund is available for land acquisition and capital improvements for sites which will benefit from short to medium term investment and return an increased financial and non-financial outcome.
7. Financial Performance
The following tables and section provides an overall financial summary covering all Panuku Development Auckland’s activities.
7.1 Operational
For the quarter ended 31 December 2016
$’m Budget Actuals Variance Full year Full year Variance YTD YTD YTD budget forecast
Operational RAG*
Revenue/External 18.9 20.6 1.7 37.7 39.4 1.7 funding 17.9 14.0 (3.9) 37.0 32.3 (4.7) AC funding
Expenditure 26.6 22.7 3.9 51.9 49.0 2.9 excluding depreciation Fair value decrease / (increase) on investment property 5.6 4.4 1.2 11.2 11.0 0.2 Depreciation
Tax
Net 4.6 7.5 2.9 11.6 11.7 0.1 Surplus/(Deficit) After Tax
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 11 of 20 *RAG Status: Green - Performance on target or better Amber - Target may not be met, corrective action taken Red - Target may not be met, action required
The Net Surplus After Tax is $2.9m higher than budget at the end of the second quarter.
Revenue and External funding is $1.7m ahead of budget due to the following; a. $0.3m in additional interest revenue, received from Fu Wah as interest on the hotel lease prepayment, which is scheduled for payment after practical completion of the construction project. Interest will continue to be charged and the forecast reflects $0.7m of additional income in year. b. $0.5m in additional car parking revenue c. $0.3m in utility and rates recharges d. $0.4m additional revenue from Wynyard Wharf fees e. $0.3m additional event income from Queens Wharf f. $0.3m additional property rental and maintenance income g. $0.1m received from EECA for sustainability projects, and h. $0.4m in additional berthage revenue, through greater occupancy at Westhaven, Viaduct and Silo Marinas. i. Offset by $0.9m less recharges for property acquisitions as we have acquired less properties than budgeted.
AC funding is ($3.9m) unfavourable compared to budget. This is due to the Madden/Packenham Street capital project being behind budgeted phasing, resulting in a slower than anticipated draw down of funding from Council.
Expenditure excluding depreciation is $3.9m favourable compared to phased budget due to the following; a. $0.4m permanent saving in rates expense as a number of sites within the Wynyard Quarter have been turned over to our development partners and they are now responsible for rates. b. $1.1m permanent saving in interest expense as there was less debt drawn in the FY15/16 year, and thus ongoing interest costs are less than budgeted. c. $0.6m permanent saving in consultants cost in relation to the acquisition and disposal of properties on behalf of Auckland Council. d. The $1.8m remaining is a timing difference over a number of expense categories and should be corrected by year end.
Depreciation is $1.2m favourable compared to budget, this is due to slower than anticipated capitalisation of assets from both the prior and current years. This is a timing difference and should mostly correct by year end.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 12 of 20 7.2 Capital
For the quarter ended 31 December 2016
$’m Budget Actuals Variance Full year Full year Variance YTD YTD YTD budget forecast
Capital 23.2 10.7 12.5 49.3 33.0 16.3 Expenditure 10.0 6.0 4.0 21.1 16.4 4.7 AC funding 13.2 4.7 8.5 28.2 16.6 11.6 External funding
Year to date capital spend is $12.5m behind phased budget due to the following:
a. AC Funded spend is $4.0m behind phased budget, the major AC Funded (Public) project underway is the Madden and Packenham street upgrade. This project started in August 2015 and it is expected to be completed in April 2017, there has been a $2.1m timing difference in spend this year, this is expected to correct by the end of the financial year. There are a number of other projects that have been delayed in starting and due to timing a potential savings in year of $4.7m has been forecast.
b. External funded/commercial projects $8.5m saving to phased budget. $4.5m in decontamination of the Wynyard central sites (Willis Bond and Precinct), these payments are made when requested by the developer and depend on the construction progress on their sites, we expect the total payments in year to be $1.0m less than budget by the end of the year. There are a number of other capital projects that have timing differences to phased budget, $0.3m for the Marina Pile Redevelopment as there has been delays in obtaining resource consent, construction in this project is not expected to start until FY17/18 and a $5.2m saving in year is forecast. $0.3m Westhaven Marine Village, this project is still in the design stage with construction expected to start FY17/18 and a forecast $4.6m saving in year. $1.5m Superyacht/Site 18, this is a timing difference and is expected to correct by year end.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 13 of 20 8. Key performance measures
The table below shows the result of Panuku’s SOI performance measures for the quarter. Achieved? Measure Year-end target (RAG Last Actual Status) Net surplus on the 1. Property Portfolio Net Net Surplus achieves property portfolio is Surplus budget for 2016/17 $13.78m, $1.38m above YTD budget as The net surplus on the at 31 December 2016. property portfolio achieves the annual budget agreed with Council.
The average monthly 2. Occupancy percentage The average of
occupancy percentage monthly % For those properties available for the quarter is 98%. occupancy for the for rent: year is 95% or more. The rolling average over a 12 month period, of % occupancy at each month end (LTP). A list of Properties to the value 3. Recommended Property recommended of $23.5 million have Disposals properties totalling been recommended to Stakeholder input is obtained $75 million gross the governing body for prior to Council Committee value will be clearance at the end approval for disposal being submitted to Council of December 2016. sought. seeking approval to dispose for 2016/17 List of properties financial period. recommended for disposal submitted to Council, A recommended for disposal target for The disposal target for the 2017/18 will be next financial period will be agreed with Council agreed with Council in the in the 2016/17 current financial period. financial period.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 14 of 20 Achieved? Measure Year-end target (RAG Last Actual Status) 4. Net Property Sales Net property sales of Meet or exceed
$55.67m have been financial forecasts Achieve total forecast net achieved to the end of sales for the financial year. Property disposal December 2016 target of $50 million against the target of (net value of $50m. unconditional sales).
Property disposal target (net value of unconditional sales) for 2017/18 financial period will be agreed with Council in 2016/17. 5. Development Target is on track and At least 50
Opportunities progressing opportunities
identified and Written evidence that assessed opportunities have been 25 opportunities have identified and assessed, to be been assessed to date. progressed or not.
(Housing and urban regeneration combined)
9. Annual performance measures
The table below details Panuku’s other SOI performance measures that are reported annually at the end of the financial period.
Measure Year-end target Last Actual
Rolling HLPP programme – approved by The quarterly rolling HLPP Annual Target Board programme is approved by the Board. Implementation process Transform/Unlock Number of significant Annual Target projects are completed as planned. Master programme (Master Programme to the Board) deliverables completed
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 15 of 20 Measure Year-end target Last Actual
within the Board approved timeline.
[Reported through the Master programme] Percentage of visitors surveyed satisfied 75% Annual Target with their experience of the public spaces on the city centre waterfront (LTP) Percentage of Aucklanders surveyed who 73% Annual Target have visited the city centre waterfront in the past year (LTP) Percentage of attendees surveyed satisfied 84% Annual Target with key Waterfront place programmes and activities Number of significant Māori initiatives 47 Annual Target implemented per annum (LTP) Percentage of customers surveyed satisfied 74% Annual Target overall with marina facilities and services (LTP) Percentage % of mana whenua and Maintain or improve Annual Target mataawaka satisfied with quality of baseline established in engagement 2016 Improvement in gross rental income on The annualised % Annual Target those properties that are available for rent movement in gross rental and have been held in the portfolio for at income of properties with least two years prior to the end of the rent reviews during the reporting period. financial period is equal to or greater than the CPI movement.
ROI on properties on a like for like basis Greater than or equal to Annual Target (LTP) 2.2% Maintain or improve the baseline established at the end of the 2012/13 financial year Panuku is committed to continuously review and improve the ROI target over the term of the SOI.
Return on Equity on commercial assets and 8.4% Annual Target services (LTP)
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 16 of 20 Measure Year-end target Last Actual
Acquisitions are delivered within the 75% satisfaction against Annual Target timeline agreed with AC and AT. agreed service performance measure Development Agreements Three year target Annual Target
Twenty six development agreements with third parties including community housing organisations to be entered into. (for the period 2016 - 2018) Development Agreements Three year target Annual Target
Fifteen development agreements with third parties including community housing organisations to be entered into. (for the period 2017- 2019) On completion, the project achieves the All projects completed this Annual Target financial and non-financial outturn in the year achieve business case business cases. financial and non-financial outturn.
10. Contribution to Māori outcomes
The table below shows Panuku’s progress on SOI project and initiatives contributing to Māori outcomes.
Key project and Description Progress initiatives Achieving better Implement the Panuku Māori A Maori Responsiveness Action Plan was outcomes for Responsiveness Plan (MRP) adopted by the Panuku Board in June and with Māori that focuses on achieving 2016. The plan puts structure to work- better outcomes for and with stream ownership, priority actions and Māori. reporting for activities underway across
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 17 of 20 Key project and Description Progress initiatives Panuku will be responsive to the business. The focus being on ensuring both mana whenua and other a comprehensive approach that is Māori in giving effect to the embedded business-wide. MRP. Continued input to Te Toa Takitini (led by Te Waka Angamua) where Panuku can contribute to delivery of priority projects.
Mana whenua Manage a robust inclusive Panuku has continued strong positive Engagement monthly mana whenua Forum feedback from mana whenua on the Forum to enable relationship with progress and evolution of the Forum establishment Panuku and facilitate input to overall. Panuku projects. Our October Forum bedded in our high Identify mana whenua level reporting protocol, and provided interested in Panuku projects governance decision-making on mana and facilitate input. whenua input into the Transform Coordinate efficient Onehunga High Level Project Plan, and engagement with Council Framework Plans for Transform Manukau family to streamline and Unlock Northcote. engagement with mana Other items discussed were the East whenua and other Māori. West Link Board of Inquiry process, Continue to share information Unlock Old Papatoetoe project initiation, with the Independent Māori Queens Wharf Mooring Dolphin Statutory Board (IMSB). infrastructure update and 20 Barrowcliffe Panuku will contribute Place pilot. This is a Panuku pilot for information required for Te mana whenua third sector housing Tiriti Audit and will take consortium for affordable housing account of IMSB’s Schedule of delivery in Transform Manukau. Issues of Significance, The The monthly Forum is proposed to move Māori Plan and the suite of to bi-monthly in the new year now that statutory provisions relevant reporting and process has gained to our activities. efficiency.
Māori Engagement with mana Panuku in the last quarter discussed with Development whenua and other Māori three mana whenua entities their interest Opportunities organisations on commercial and potential desired role(s) in the 20 and housing developments, Barrowcliffe Pilot project. Potential partnering opportunities in structures are being worked through urban redevelopment projects based on interests expressed for those
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 18 of 20 Key project and Description Progress initiatives and opportunities to purchase desiring to participate in the consortium properties surplus to council at a partner level. requirements. The Maori Commercial Relationships Explore any means to improve action plan was approved at the June the coordination and efficient Board meeting. The action plan is now in engagement with mana implementation phase. Early advice has whenua and other Māori been provided to mana whenua for the organisations around potential Hobsonville Airfields development and disposal properties and the Old Papatoetoe Tavern Lane properties that may become development. available for development.
Recognition and Panuku will facilitate cultural Implementation of Project Charters for celebration of expression opportunities High Level Project Plan and Framework Māori cultural through Te Aranga Design Plan mana whenua engagement is values and application in early planning in providing anchoring material to heritage Transform and selected contribute to our delivery of recognition Unlock locations. This work of Maori Cultural Value and Heritage in flows down to implementation Panuku projects and place-activation of cultural expression programmes. opportunities in public realm This process is streamlining mana projects. whenua conversations, providing Māori identity will be structure to gaining content more recognised through promotion effectively and efficiently, with strong of te reo Māori such as and clear buy-in at the outset. naming new streets, laneways, Recommended content for Manukau and buildings, signage, other Northcote Framework Plans and communications, art and Onehunga High Level Project Plan was landscaping. confirmed in the October Forum, Placemaking will support Takapuna Framework plan was confirmed Māori-focussed events at the in December. Work has begun on the waterfront and other selected Henderson HLPP and Old Papatoetoe. locations. Implementation level work continues in Wynyard Central. Mana whenua artist design work is bringing strong
contemporary Maori design into the
Innovation Precinct. Concepts support a theme also expressed through anchoring naming in the central lane ‘Tiiramarama Way’.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 19 of 20
Initiative How it contributes to Maori Spend to Forecast outcomes date total spend $000 $000
Maori engagement Improves public space and $64 $ 92 activities through input from Iwi $154 $ 327 Maori Ensures that public spaces and technical/specialist developments respect and reflect
advice Maori culture and history. $ 3 $ 5 Maori koha
11. Key Local Board issues
Building and maintaining strong relationships with elected members is an essential component of our success. We put a significant amount of effort into building relationships, particularly with Local Boards over 2016, to ensure robust and smooth decision making processes that enable programme momentum. Panuku worked closely with Local Board Services to ensure a smooth transition period pre and post elections. Swearing in the new elected members provided us with an opportunity to once again highlight our purpose and work programme for the next trimester. We capitalised on this opportunity immediately post-election with a number of individual and cluster briefings to local boards. We also provided the boards with a Panuku information pack that contained relevant background material on our objectives, work programme and overall property services we provide. We continued to work with Local Board Services over November and December to prepare for the February 2017 formal induction process. Recruitment for the Engagement Team was finalised in December and as of February 2017 we will have a Senior Engagement Advisor working exclusively on a geographically focused portfolio of seven local boards. The engagement advisors are now well placed to embed themselves in relationships and communities at a reasonable level of intensity.
12. Risk Management
Panuku has a comprehensive risk management framework based on AS/NZS ISO 31000: 2009 Risk Management Standard. This provides a structured approach to identifying and managing uncertainties relating to achievement of its objectives. Some of the key risk activities and processes include:
• The Board and Senior Leadership Team reviewing key organisation risks on a monthly basis
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 20 of 20 • Board subcommittees and groups that provides direction on risk management or key risk areas such as the Audit and Risk Committee and Health and Safety Advisory Group • Policies that provide guidance and direction to the management of organisation risks such as the H&S Policy and Conflict of Interest Policy and Protocol • A thorough internal decision-making process that involves risk assessments, for example business case proposals supported by cost benefits analysis • Special reviews such as due diligence on financial viability of development partners • Real time reviews, internal audit programme and other activities providing assurance on the effectiveness of controls for managing risks • An annual independent audit completed by Audit New Zealand.
Current significant risks to the company are:
• Pipeline of sites for future development • Funding for significant Transform and Unlock projects • Health and Safety of public and workers across our areas of control • Integrated planning across Council group
To achieve shareholder outcomes, Panuku will continue to take and manage risks in a calculated and responsible way.
Panuku Development Auckland Quarterly Report – Quarter ended 31 December 2016 Page 21 of 20 Second Quarter Report 2016-17
FOR THE QUARTER ENDED 31 DECEMBER 2016 TABLE OF CONTENTS
EXECUTIVE SUMMARY ...... 1 STRATEGIC THEMES AND FOCUS AREAS ...... 2 HIGHLIGHTS FOR THE LAST QUARTER ...... 2 AUCKLAND ART GALLERY TOI O TĀMAKI ...... 2 AUCKLAND CONVENTIONS ...... 3 AUCKLAND LIVE ...... 3 AUCKLAND STADIUMS ...... 4 AUCKLAND ZOO ...... 5 FUTURE OUTLOOK ...... 6 KEY DELIVERABLES ...... 8 UNAUDITED FINANCIAL PERFORMANCE ...... 11 RFA OPERATIONAL ...... 12 RFA CAPITAL ...... 13 PERFORMANCE MEASURES ...... 14 CONTRIBUTION TO MĀORI OUTCOMES ...... 16 LOCAL BOARD ENGAGEMENT ...... 18 RISK MANAGEMENT ...... 18
EXECUTIVE SUMMARY
Regional Facilities Auckland (RFA) works in partnership with key stakeholders to present exciting, engaging and accessible experiences to those who live in and visit our city. Our innovative and imaginative programming delights people – every single day – and our collections and venues are some of the best in New Zealand.
The second quarter programme included an exciting array of exhibitions, shows and entertainment as people flocked to experience and enjoy RFA’s exciting activities and events across Auckland.
Highlights of the second quarter include: the announcement of major stadium concerts by Adele and Justin Bieber in early 2017; the launch of Summer in the Square and the Southern Hemisphere’s largest LEGO Christmas tree in Aotea Square; the Coldplay concert at Mt Smart Stadium in December; the announcement of the March opening at Auckland Art Gallery Toi o Tamaki of Body Laid Bare: Masterpieces from Tate; the annual Auckland City Mission Christmas Lunch at the ANZ Viaduct Events Centre; and Roald Dahl ‘s George’s Marvellous Medicine at the Bruce Mason Centre.
RFA’s festive season programming attracted thousands of visitors to venues across the city with a varied line-up of entertainment that included live music, theatrical performances, free LEGO workshops, art exhibitions and themed Christmas celebrations designed to appeal to a broad range of audiences.
In December, Auckland Zoo completed the second project of its extensive 10-year redevelopment programme with the opening of Strangely Beautiful Australia. The Zoo also presented more than 30,000 signatures to Parliament as part of its Ask for Choice: Unmask Palm Oil conservation campaign, which advocated for clear labelling of palm oil in food products to enable consumers to make an informed choice.
Work on the QBE Stadium field redevelopment project commenced in December. The project is due for completion in two stages and will see an outer field turned into two and the installation of new floodlight poles and a new grounds shed. The redeveloped oval will provide much-needed high-performance training capacity at QBE Stadium. This will provide particular benefits to NZ Football and North Harbour Rugby while also providing indirect benefit for community users that will have greater access to our other fields.
Other event highlights for the second quarter includes the season of the musical Priscilla Queen of the Desert, the national finals of the 48 Hour Film Festival and Show Me Shorts at The Civic, critically acclaimed exhibitions by Taiwanese-American artist Lee Mingwei and New Zealand photographer Ann Shelton at Auckland Art Gallery, Christmas celebrations at Auckland Zoo and spring graduations and New Zealand citizenship ceremonies at Auckland Town Hall and Aotea Centre.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 1 RFA finished the first half of the financial year with an “accounting” deficit of $2.1m which is $5.3m unfavourable to budget. This does not reflect the core operations of the organisation as it includes abnormal or non-cash items such as donated assets, asset write offs, funding for capital works and depreciation.
The operational result is unfavourable to budget by $0.5m. While costs were under budget by $1.0m, external revenue was unfavourable to budget by $1.5m due to poor weather affecting Auckland Zoo revenue, budget phasing of major stadium concerts and challenging revenue targets in Auckland Conventions.
RFA’s diverse and exciting range of activities support social outcomes and economic growth in Auckland by attracting domestic and international visitors.
STRATEGIC THEMES AND FOCUS AREAS
RFA focuses its work around five key themes:
. Engaging our community
. Developing our people
. Building a financially sustainable future
. Enhancing our operations
. Growing our reach and influence
Key initiatives include: delivery of RFA’s capital programme including Auckland Zoo’s major redevelopment and improvements to stadium infrastructure to support the Auckland Stadiums Strategy; development and implementation of a customer experience strategy and associated service delivery mechanisms; and initiatives to meet our revenue growth goals.
HIGHLIGHTS FOR THE LAST QUARTER
AUCKLAND ART GALLERY TOI O TĀMAKI
The second quarter saw the Gallery launch its largest ever Gottfried Lindauer exhibition – The Maori Portraits: Gottfried Lindauer’s New Zealand. Featuring over 120 portraits of Māori and Pākehā, including nine newly-discovered works, the exhibition is generating strong interest and welcomed a special visit by Dutch royals King Willem-Alexander and Queen Maxima during their recent tour of New Zealand.
The quarter also saw the announcement of the Gallery’s next major exhibition The Body Laid Bare: Masterpieces from the Tate, due to open in March 2017. The Body Laid Bare will bring
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 2 to New Zealand more than 100 celebrated artworks featuring the human form, including Auguste Rodin’s famous sculpture The Kiss – seen outside of Europe for the first time.
The November launch of Taiwanese-American artist Lee Mingwei’s series of participatory art exhibitions, His Relations: The Art of Participation, which included a ballot to spend a night in the Gallery with the artist, letter writing and mending garments – all with active audience participation – received significant media and social media coverage. Opening in the same month was Ann Shelton: Dark Matter, the first major review of the Wellington photographer’s 20 years of practise, including previously unseen photographs.
The Hole of Yellow Archipelago closed at the end of November. This award-winning creative learning installation, which opened in late 2015, drew more than 200,000 budding young artists and their families.
In November, the Gallery welcomed its first painting by Claude Monet. Le pont japonais (Japanese Bridge) (1918-1924) depicts Monet’s famous waterlily garden and Japanese bridge, and was presented to the Gallery on a five-year loan by Soichiro Fukutake, initiator and owner of the Benesse Art Site in Naoshima, Japan. The Monet is on display as part of the Gallery’s current exhibition Game Changers: International Modernism.
The summer rooftop music series Anno Domini returned to the Gallery. Featuring a line-up of renowned international and Kiwi DJs and producers alongside gourmet food and cocktails, the popular series is located on the Gallery’s east terrace and runs until March.
AUCKLAND CONVENTIONS
Auckland Conventions staged 200 events during the second quarter, starting with the 18th annual Auckland on Water Boat Show at the ANZ Viaduct Events Centre. Held over four days, the show is New Zealand’s largest on-water boat show and features experts on sailing, fishing, paddle-boarding, water sports and pleasure cruising.
Several major conferences and trade shows were also held at RFA venues during the quarter, including the New Zealand Defence Industry Association (NZDIA) Forum, the Mustang Convention and the annual Whitecliffe Fashion Show at the ANZ Viaduct Events Centre; the 13th WCCM World Congress of Chinese Medicine at Aotea Centre; and spring graduation and New Zealand citizenship ceremonies at Aotea Centre and Auckland Town Hall.
Auckland Conventions hosted the Auckland City Mission Christmas Day Lunch at the ANZ Viaduct Events Centre for the sixth consecutive year, with staff volunteering their time. This important community occasion provides the opportunity for people who would not otherwise be able to do so to celebrate Christmas.
The number of Christmas events were down this year in comparison to prior years as there is strong competition for these profitable events. Corporate Xmas parties tend to seek different venues each year and repeat annual bookings are minimal.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 3
The conventions market is very competitive and the environment for Auckland Conventions remains challenging. Auckland Conventions is at the unique, premium price end of the market and this is the most competitive segment of the industry. As a result, event numbers are down 7% on last year and revenue targets have been affected.
AUCKLAND LIVE
Auckland Live launched into the second quarter with the return of the popular Summer in the Square – three months of free family-friendly activities and events in Aotea Square. Highlights include the New Zealand premiere of Trolleys by the New Zealand Dance Company, a Vintage Weekend, a Latin Fiesta and performances by Auckland Philharmonia Orchestra’s Young Achievers.
The festive season also saw the installation in the square of a two-storey high LEGO Christmas tree – the largest LEGO build in the Southern Hemisphere. The tree generated strong media coverage in New Zealand and Australia, and was a popular seasonal attraction for Aucklanders and visitors to the city.
In December, Auckland Live presented the internationally acclaimed production of George’s Marvellous Medicine, based on the beloved Roald Dahl children’s tale, at the Bruce Mason Centre as part of its summer holiday line-up. The play attracted an audience of more than 7,500 during its short run, with initiatives like “Grandmas Go Free Monday” proving especially popular with theatre goers.
The Auckland Live Green Team introduced 80 new recycling bins to Auckland Town Hall, The Civic and the Herald Theatre in a move to improve waste management and offer patrons better access to green options when it comes to waste disposal.
Other notable event highlights of the quarter include a 6 week season of the award-winning musical Priscilla Queen of the Desert, the Auckland Theatre Awards and the final of the 48 Hour Film Festival and Show Me Shorts at The Civic; the annual Star Jam and Variety Dance Show performances at Bruce Mason Centre; performances of the The Nutcracker by the Imperial Russian Ballet Company, the National Youth Theatre Company’s Joseph and the Amazing Technicolour Dreamcoat and Auckland Philharmonia Orchestra’s Final Symphony at Aotea Centre; and Kiwi existential comedy Perplex at the Herald Theatre.
AUCKLAND STADIUMS
Auckland Stadiums had a very successful second quarter, led by the announcements that international artists Adele and Justin Bieber will both perform at Mt Smart Stadium in March next year. Tickets to the first two Adele concerts sold out in a record-breaking 23 minutes, with tickets to her third concert also selling out quickly.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 4 Coldplay performed at Mt Smart Stadium in December to a crowd of over 40,000, including over 15,000 attendees from outside Auckland. The event contributed $4.16m to Auckland’s GDP.
A diverse line-up of events at RFA’s outdoor venues meant a busy second quarter for the Stadiums team. Taste of Auckland returned to Western Springs Stadium in November for the third consecutive year. Featuring sumptuous offerings from some of the city’s top restaurants and artisanal producers, more than 20,000 people enjoyed the popular foodie festival’s gourmet food, craft beer and boutique wines in beautiful surroundings.
Sporting highlights for the quarter included the All Whites World Cup qualifier against New Caledonia in November and the Mitre 10 Cup Championship at QBE; and the Northern vs WaiBOP National Women’s League football game and the Wellington Phoenix FC vs Western Sydney Wanderers FC Hyundai A League game at Mt Smart.
AUCKLAND ZOO
Auckland Zoo’s new $3.2m Australian development opened in December. Strangely Beautiful Australia features more than 20 unique Australian wildlife species including giant monitor lizards, snake-neck turtles, huntsman and red-back spiders, water dragons, goliath stick insects, green and golden bell frogs, three species of rainbow fish, red-necked wallabies, emu, Tasmanian devils and a diversity of Australian birds. The opening is the second project of the Zoo’s extensive 10-year redevelopment programme. Construction of the new South-East Asia precinct will commence in late 2017.
The Zoo collected over 30,000 signatures to present to Parliament for the Ask for Choice: Unmask Palm Oil consumer campaign, which called for clear labelling of all food products containing palm oil. Palm oil that has not been sustainably produced is a threat to critically endangered species such as Sumatran tigers and orangutans, as large areas of their habitat are cleared to make way for palm oil plantations in South East Asia.
As part of the festive season, the Zoo held Christmas at the Zoo, a special event featuring live music, a Kiwiana Christmas show, food, drink and family-friendly activities including special animal encounters and face painting. Santa’s Grotto at the Wildzone gift shop was also a popular destination during December.
The Zoo continued it important conservation efforts, including performing life-saving surgery on a Kiwi chick which will be released on Rotoroa Island once it has made a full recovery. Spring was breeding season for many New Zealand native birds including kiwi, kōkako and pāteke. The Zoo has been actively working with conservation partners including DOC to find and protect nests and young, to help preserve these endangered species for future generations.
The Zoo’s admission revenue has been affected by a record number of wet weather days this year in comparison to last year. In addition to inclement weather, there is strong competition for the leisure dollar in Auckland. There are many free events over the summer
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 5 period and an increased number of options available. As a result, Zoo revenue is down $434k on budget year to date.
FUTURE OUTLOOK
The New Year will see an exciting and diverse range of events and activities across RFA.
Auckland Live’s third quarter line-up includes the St Petersburg Ballet Theatre’s performance of Swan Lake and the world premiere screening of New Zealand film Pork Pie at The Civic; Australian rock icon Jimmy Barnes’ first-ever “spoken word” tour, award-winning UK musician Passenger, and a concert featuring 90s pop groups B*witched, Atomic Kitten, S Club 3 and Liberty X at Aotea Centre.
Auckland Arts Festival will showcase theatre, music, cabaret, dance and visual arts over 18 days in March. Notable highlights include award-winning international variety show La Soirée, featuring a mix of cabaret, new burlesque, circus sideshow and contemporary vaudeville in the Spiegeltent in Aotea Square, and Cloud Gate Dance Theatre’s contemporary Taiwanese dance performance Rice at the Aotea Centre.
Auckland Stadiums has a massive line-up of major stadium concerts over the summer, including much-anticipated shows by Guns N’ Roses at Western Springs Stadium and Bruce Springsteen and Justin Bieber at Mt Smart Stadium. One of the world’s best-selling recording artists, Adele, will perform three concerts at Mt Smart in March in her first-ever New Zealand tour.
Wellington Phoenix will play the second match of the Hyundai ‘A’ League season at QBE Stadium in March in the lead-up to the winter sport season, while the New Zealand Warriors open the NRL season with a home game at Mt Smart Stadium in early March.
Auckland Zoo will begin the third phase of its 10-year redevelopment plan after the second quarter opening of Strangely Beautiful Australia. Construction work for the renewal of the South East Asia precinct, the biggest project of the development so far, is expected to commence in late 2017.
The annual Whio Family Fun Days at the Zoo will run over the weekend of 4/5 March. A highlight of the Zoo calendar, this popular family-friendly programme is a unique opportunity to learn about whio (blue duck) conservation. More than 3,000 students from low decile schools in Auckland and Northland will participate in free educational experiences at the Zoo as part of the ongoing The Warehouse School Zoofari programme in 2017.
Auckland Conventions will host the annual New Zealand Cricket Awards at the ANZ Viaduct Events Centre at the end of March. The prestigious event will be widely attended by sporting stars, media and industry.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 6 New Zealand artist Judy Millar’s new installation for Auckland Art Gallery’s south atrium is on track to be unveiled in early 2017. The installation was commissioned through funds raised by the Auckland Art Gallery Foundation. Opening in March, the much anticipated The Body Laid Bare: Masterpieces from the Tate, features more than 100 celebrated artworks from one of the world’s leading art museums, including Auguste Rodin’s famous sculpture The Kiss – seen for the first time outside of Europe.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 7 KEY DELIVERABLES
PROJECT DELIVERABLE STATUS PROGRESS
INFLUENCING Close collaboration with the Auckland Ongoing RFA continues to work closely with SECTOR CHANGE Council and the museums, stadiums and Auckland Council and the museums, arts and cultural sectors to improve the providing advice as and when required in financial sustainability, standards of relation to the respective museums’ annual
service delivery, and cultural and plans and legislation. economic benefits to the Auckland The draft Annual Plans for the Auckland community. War Memorial Museum and Museum of Transport and Technology (MOTAT) were received and advice was provided as required to Auckland Council.
STAKEHOLDER RFA will continue to work with Auckland Ongoing Auckland Zoo is working with Brian Ireland ENGAGEMENT Council and Local Boards in a (Taranaki Whanui Te Ati Awa) to develop collaborative way to ensure that key educational programmes within the Zoo. strategies and policies are adhered to RFA works with ATEED to ensure that and that decisions represent the best event planning is coordinated across the interests of the Council group and city. These activities range from cost ultimately the ratepayer. Key to achieving effective management of large events, this is: sharing of resources and reducing Engage where appropriate with the duplication of effort. Examples of Councils Group’s Alternate collaboration are Diwali Festival, and the Financing initiative. planned use of Aotea Square for the NRL9’s Launch in early 2017. Working with Auckland Tourism Events and Economic Development (ATEED) to develop and deliver significant events for the region and where possible reduce ratepayer funded events and venues competing against each other. Collaborate with sector stakeholders to provide thought leadership and drive overall creative vision. HEALTH AND RFA is committed to driving a strategy Ongoing RFA has reviewed and revised its Health & SAFTETY CULTURE that aims to improve the health and safety Safety Strategy as required each year. A of our employees, visitors, contractors, number of key objectives have been clients and patrons, and maintain the identified and annual targets set for well-being of all our employees. We will measuring progress. The revised Health do this by: and Safety Strategy has been approved by Reducing employee injuries by 25% the RFA Board. Monthly reports against over five years and reviewing targets are provided to the Executive incidences to the public to identify Leadership Team and the Board. The hazards and prevent recurrence. Health, Safety & Risk Committee of the Board meets quarterly and is provided with Active involvement and commitment more in-depth information. Board site visits of leaders in management of health of RFA venues have been undertaken over and safety through behavioural the last 6 months and will continue. The safety and personal responsibility. ACC audit for RFA was successfully Increased worker engagement undertaken and the secondary level through adopting behavioural safety accreditation achieved. and personal responsibilities. Aligning our health and safety management system to industry best practise.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 8 PROJECT DELIVERABLE STATUS PROGRESS
EXTERNAL RFA will continue to identify, develop and Ongoing Significant progress has been made on a REVENUE implement opportunities for increasing number of these aspects, including: MAXIMISATION external revenue to minimise the cost to Auckland Art Gallery Toi o Tamaki ratepayers of delivering activities that opened its largest-ever Gottfried enhance Auckland’s cultural capital. Key Lindauer exhibition The Maori to this strategy is: Portraits. This exhibition which Exploring other revenue opened in October involved opportunities through closer collaboration with ATEED to deliver an collaboration across the sectors we exhibition that has significance to New operate in, partnering with private Zealand and Maori. businesses, and leveraging Council Retail sales associated with the Group initiatives. Lindauer exhibition were very strong; Enriching events programming and and a second print run was required of driving revenue growth through the exhibition catalogue (unusual for pursuing investment opportunities art publishing) utilising the Production Investment Launch of the new online shop for Fund. Auckland Art Gallery Working with ATEED to develop and Auckland Zoo completed the second deliver significant events for the project of its extensive 10-year region and where possible reduce redevelopment programme with the ratepayer funded events and venues opening of Strangely Beautiful competing with each other. Australia on 17 December. Working with various sectors and Completion of the detailed planning our business partners to develop phase for the refurbishment works at philanthropic and sponsorship the Aotea Centre. Physical works are activities. expected to be carried out from Enhancing the customer experience February 2018 to February 2019. by gaining further customer market intelligence and market insight to connect to new audiences. Strategic capital investment into existing facilities. Growing the depth and breadth of our revenue base. ENHANCING THE Investment in digital media by identifying Ongoing Achievements to date include the OPERATIONAL business requirements including CRM, redevelopment of the Auckland Live website BRANDS digital platforms and growing social media and the launch of Auckland Art Gallery’s online to connect with new audiences. shop. Focus for the current financial year has been the development of a strategic approach for customer experience and digital activities including planning for RFA’s remaining websites.
DELIVERY OF KEY AUCKLAND STADIUMS Ongoing Active progress has been made in CAPITAL Strategic investment into Auckland advancing the capital works across QBE PROJECTS Stadiums by exploring opportunities to Stadium and Mt Smart Stadium. In addition to the increase utilisation and financial Major projects underway at Mt Smart delivery of essential sustainability through investment into include: renewals work to Western Springs, QBE North Harbour Installation of a new LED screen ensure RFA venues Stadium and Mt Smart Stadium. (rather than hiring) are fit for purpose for Renewal of player and official facilities hirers and the and media facilities Auckland community, there are three capital Renewal of entry gates investment areas Installation of new LED floodlights, making Mt Smart the first stadium in NZ with broadcast-standard LED lights and further contributing to RFA’s ongoing sustainability improvements. Development of the outer oval at QBE Stadium into fit for purpose floodlit training
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 9 PROJECT DELIVERABLE STATUS PROGRESS fields is underway. Earthworks and construction commenced this quarter. Completion of the field area is due in March. A full business case for the redevelopment of Western Springs will be tabled to the RFA Board for consideration by June 2017.
AOTEA CENTRE Ongoing Development of a full business case to Strategic capital investment into the expand the Aotea Centre is underway and Aotea Precinct with external parties to will be presented to the RFA Board for enliven and grow the cultural activity of consideration in by June 2017. Auckland. An arts and cultural hub seeks synergies in clustering and generates new retail and commercial investment and improves the customer experience.
AUCKLAND ZOO Ongoing The Zoo is in the second year of a major Invest in Auckland Zoo’s aging capital renewal programme to address its infrastructure to cater for increasing aging infrastructure. international standards of animal care, Major projects underway include: health and safety and improved visitor The Australian precinct was completed experience. and opened to visitors on 17 December 2016. Concept and design work is underway for the South East Asia precinct and is due to be completed in February. This project significantly upgrades facilities for a range of species including orangutans and tigers. Construction is expected to commence late 2017.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 10 UNAUDITED FINANCIAL PERFORMANCE
FULL YEAR YTD ACTUAL YTD BUDGET ANNUAL PLAN DEC 2016 DEC 2016 VAR $ VAR % 2017 $000s $000s $000s $000s OPERATIONAL REVENUE Opex funding from Auckland Council 12,859 12,859 0 0% 25,718 Capital funding from Auckland Council 1 13,177 16,295 (3,118) (19%) 40,446 Fees and user charges 19,972 21,345 (1,374) (6%) 45,907 Subsidies and grants 1,688 241 1,447 601% 518
0 0 0% 0 Development and financial contributions 0 Vested assets (non-Crown) 0 0 0 0% 0 Other revenue 3,717 3,442 275 8% 7,083 TOTAL REVENUE 51,413 54,182 (2,769) (5%) 119,673
EXPENDITURE Employee benefits2 17,951 17,343 (608) (4%) 34,871 Depreciation and amortisation 13,104 12,292 (812) (7%) 24,888 Grants, contributions and sponsorship 662 693 32 5% 1,379 Other operating expenses 22,097 21,077 (1,020) (5%) 43,801 TOTAL EXPENSES 53,814 51,407 (2,407) (5%) 104,940
Finance income 433 574 (141) (25%) 1,076 Finance expense 121 126 5 4% 252 NET OPERATING INCOME (2,089) 3,223 (5,312) (165%) 15,557
CAPITAL EXPENDITURE Total capital expenditure 13,177 16,295 3,118 19% 40,446
1 Includes approved deferrals 2 Actual employee costs include direct payroll costs relating to event delivery. These are budgeted under ‘other operating expenses’
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 11 RFA OPERATIONAL
RFA finished the half year with an accounting deficit of $2.1m which is $5.3m unfavourable to a budgeted Annual Plan surplus of $3.2m. These figures does not reflect the core operations of the organisation as it includes abnormal or non-cash items such as donated assets, asset write offs, funding for capital works and depreciation.
The major accounting variances are presented in the table below.
YEAR TO DATE VARIANCE $000s COMMENTS
CAPITAL FUNDING (3,118) Capital programme is behind budget due to timing of projects at Aotea Centre, Stadiums and the Auckland Zoo redevelopment programme.
FEES AND USER CHARGES (1,374) Timing differences of major stadiums concert revenue; Auckland Zoo admission revenue down due to wet weather conditions affecting visitation numbers; and Challenging revenue targets for Auckland Conventions and timing of events. SUBSIDIES AND GRANTS 1,447 Artwork donated to the Auckland Art Gallery (in Q1) is not budgeted for annually. Gifted artwork is not accounted for as revenue in the operational trading result below.
DEPRECIATION (812) Increased cost from prior year asset revaluations.
OTHER OPERATING EXPENSES (1,020) Unfavourable variance a result of sales expenses to support revenue and associated operational costs.
The operational trading result is $0.5m unfavourable to budget. The trading result is a direct result of lower external revenue of $1.8m due to:
. Admission revenue at Auckland Zoo was $434k unfavourable to budget and $125k down on YTD last year due to lower visitation numbers. Visitation is heavily affected when there are showers or rain days. To December YTD, rain days were up 8% on the same period last year. In addition, the most profitable ‘peak’ days are during school holidays and weekends which were also affected by 8 more rain days in comparison to the same period last year.
. In the first half of FY16 there was 3 concerts in comparison to 1 concert for the same period in FY17. The budget was prepared in line with the prior year’s phasing and as a result, there is a timing difference of major stadium concert revenue. The timing difference in the first half of the year will be recouped in the second half of the financial year with a strong line-up of 6 concerts planned.
. Auckland Conventions revenue is down $635k on budget and $836k on YTD last year with lower event numbers, less profitable events and strong market competition. Total events for the 6 months to December 2016 were 382; down 7% on the same period last year. The more profitable event types of cocktail events, Christmas parties and international conventions were also down at 41 (67 last year). While Auckland
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 12 Conventions has a strong portfolio of unique venues and packages, there is strong competition in the conventions market which has affected revenue targets.
The external revenue shortfall is partly offset against favourable operational expenditure. Timing of lower repairs and maintenance and advertising and marketing expenditure contributed to the favourable variance.
RFA CAPITAL
The delivery of RFA’s capital programme is behind target by $3.1m due to timing of projects at Aotea Centre, Stadiums and Auckland Zoo.
AUCKLAND ZOO
The Australia II project (Strangely Beautiful Australia) at Auckland Zoo officially opened on December 17 and was in line with the $3.2m budget.
The next phase of the 10 year redevelopment programme is the South East Asia precinct. The concept design has taken longer than expected due to the complexity of the project and is due in early February. Construction is expected to commence late 2017.
STADIUMS
A number of capital projects are underway across Auckland Stadiums to deliver a better customer experience and carry out essential renewals at Mt Smart Stadium and QBE Stadium, including:
. Redevelopment of the Outer Oval at QBE Stadium to convert one field into two training fields, including the installation of LED floodlights to enable greater public use of the grounds;
. The LED screen at Mt Smart Stadium completed at the end of January; and
. Entry gates, player and official facilities, media and broadcast facilities at Mt Smart Stadium are being upgraded. This project commenced at the end of December and will be completed by June 2017.
OTHER
Minor capital items delivered in the last quarter include:
. street lighting was installed on the O’Rourke Street entrance to Mt Smart Stadium to provide greater visibility and security for the public entering the venue; and
. containerised bar units, associated marquee covers and portable turf protection for the summer stadium concert series was delivered and successfully utilised at the Coldplay concert in December.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 13 PERFORMANCE MEASURES
RFA has an agreed set of performance measures and targets which form the basis for accountability for delivering our key strategic objectives and priorities. The framework for measuring key outcomes aligns to the measures agreed as part of the Long Term Plan 2015-2025 and Annual Plan 2016/17.
On target Behind target due to timing and will be achieved by year end Behind target and an area of focus for management Unlikely to meet year and target and requires intervention
ANNUAL SEP 2016 DEC 2016 HOW WE WILL MEASURE SUCCESS TARGET YTD YTD WHAT WE DO (LEVEL OF SERVICE) (PERFORMANCE MEASURE) 2016/17 ACTUAL ACTUAL PROGRESS We provide live arts and Number of publically available performing 825 439 770 entertainment experiences for arts performances programmed by Aucklanders and visitors to our city. Auckland Live Leader of arts and entertainment Venues include: events in New Zealand Aotea Centre, Auckland Town Hall, The Civic, Aotea Square, Bruce Mason Centre
Visitor satisfaction with experiences at 90% 92% 90% Auckland Live events Venues include: Aotea Centre, Auckland Town Hall, The Civic, Aotea Square, Bruce Mason Centre
Percentage of patrons who believe Auckland 76% 72% 77% Live provides them with a rich choice of arts and entertainment options
We bring people together and help Number of commercial event days at 443 132 202 provide identity through memorable stadiums stadium events Venues include: Mt Smart Stadium, QBE North Harbour Stadium, Western Springs Stadium
Number of community event days at 645 158 274 stadiums Venues include: Mt Smart Stadium, QBE North Harbour Stadium, Western Springs Stadium
Visitor satisfaction with experiences at 88% 83% 82% Auckland Stadium venues
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 14 ANNUAL SEP 2016 DEC 2016 HOW WE WILL MEASURE SUCCESS TARGET YTD YTD WHAT WE DO (LEVEL OF SERVICE) (PERFORMANCE MEASURE) 2016/17 ACTUAL ACTUAL PROGRESS
We care for our collections for current Total number of visitors to Auckland Zoo 720,000 137,410 315,977 and future generations to enjoy and to bring cultural awareness of art and Total number of visitors to Auckland Art 450,000 116,672 244,837 wildlife to Auckland and its visitors Gallery Visitor satisfaction with experiences at 90% 89% 88% Auckland Zoo
Visitor satisfaction with experiences at 90% 91% 89% Auckland Art Gallery
Number of Maori programmes annually at 10 1 12 Auckland Art Gallery
Percentage of visitors reporting an 80% 80% 79% enhanced appreciation of wildlife
We manage our physical building Visitor satisfaction on the condition our 90% 83% 83% assets in a way that ensures their facilities long-term existences as a valued part of Auckland’s social infrastructure
Percentage of Mana Whenua satisfaction New N/A N/A with quality of engagement Measure
Minimising the financial burden on Percentage of operating costs met through 61% 62% 63% Auckland ratepayers external revenue (excluding Council funding and depreciation)
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 15 CONTRIBUTION TO MĀORI OUTCOMES
RFA’s Māori Engagement Strategy aims to enhance existing relationships with iwi and enter into business relationships in order to create meaningful engagement. This may create employment, and be either cost neutral or generate a profit, while positively increasing the visibility of iwi and enhancing the RFA brands.
The increased visibility of iwi in terms of a business, tourism and reputational perspective is consistent with the focus of the Independent Māori Statutory Board and Council’s Te Toa Takitini approach.
RFA is committed to continuing to develop programmes and initiatives to support Maori visibility at regional facilities, support Maori businesses to engage with RFA, and support tikanga Maori cultural expression. These include Auckland Zoo’s Maori science programme, Auckland Art Gallery’s Maori Advisory Group, Auckland Art Gallery’s Lindauer exhibition, Auckland Live’s co-presentation with Wellington’s Tawata Productions of The Beautiful One in the Aotea Centre in November, and Auckland Conventions’ support for the Tamaki Herenga Waka Festival on Anniversary Day 2017.
As part of RFA’s overall renewals and capital works programme, bi-lingual signage and incorporation of Maori identity and Te Aranga design principals are being incorporated where appropriate in accordance with Auckland Council’s Te Reo Maori Framework.
In 2016, RFA commenced a significant internal initiative to build on our existing organisational capability in Te Reo and tikanga and to ensure that biculturalism is reflected in our everyday work practices.
These and other initiatives form part of RFA’s operations rather than specific and discrete projects. However, the following are examples of specific projects for the 2016/17 financial year which align with the goals of RFA’s approved Maori Engagement Framework.
INITIATIVE CONTRIBUTION TO MĀORI OUTCOMES
Auckland Zoo regularly consults with a range of iwi with respect to planned Celebration of Auckland’s Māori identity as its animal translocations, to gain support for the zoo’s applications to receive point of difference in the world for its visitors. or release native wildlife. The zoo also seeks iwi advice on, and assistance with, the appropriate tikanga associated such animal movements or exhibit openings at the zoo. Auckland Zoo has engaged Brian Ireland (Taranaki Whanui, Te Ati Awa), who has worked in the education teams of both Auckland Zoo and Zealandia Eco Sanctuary, to develop a Maori Science programme. The programme will be used primarily by the Zoo’s education team and later by the Zoo’s visitor engagement team for visiting tours and targeting tourists. Te Wao Nui has developed Māori stories and is continuing to enhance this significant component of the experience which is also being actively promoted to international visitors and includes bi-cultural signage.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 16 The Auckland Art Gallery Māori advisory group, Haerewa, was established Lindauer is renowned for his life-like portraits of in 1994 to assist with the implementation of those aspects of the Gallery’s Māori and depictions of typical Māori scenes. strategic plan relevant to Māori and to be an advisory and support group to The Lindauer paintings are among the most loved Gallery management. and admired works in the Gallery's collection with A major exhibition featuring over 140 works based on the 19th century artist local and international visitors gravitating to the Gottfried Lindauer (“Gottfried Lindauer’s New Zealand”) opened at space permanently dedicated to showing Māori Auckland Art Gallery on 22 October 2016. This is the most significant and portraits. largest exhibition of his work to date and forecast to be viewed by over As New Zealand's leading visual art institution, it is 90,000 visitors. The Descendant talks related to the portraits have Auckland Art Gallery’s role to showcase New deepened relationships with extended Maori networks. Zealand art and culture. These precious taonga The exhibition He Iwi Rangatira closed at the beginning of September give insight to our indigenous history, and by 2016. Through the 19th century, Rangatira provided a guiding presence sharing these works we hope to expand that helped the country’s many iwi to maintain strength in the face of rapid understanding and knowledge of cultural and political upheaval. This Exhibition examined the lifelike way New Zealand's unique culture worldwide. master portraitists Charles F Goldie and Gottfried Lindauer depicted some These extraordinary paintings also highlight the of our Country’s eminent Maori Leaders during this period. complex and particular cultural exchanges Lisa Reihana’s In Pursuit of Venus has been selected to represent New between Europe and Māori taking place in New Zealand at the next ‘Olympics’ of the international art world – the very Zealand a century ago. prestigious 2017 Venice Biennale. The Auckland Art Gallery Toi O Tāmaki hosted a one day of First Nations Cultural Exchange Indigenous Curators Programme on the 12th December 2016.
Auckland Stadiums provides Māori cultural experiences at major events Celebration of Auckland’s Māori identity as its and continues to actively seek iwi events. point of difference in the world for its visitors. Bi-cultural signage has been implemented at Auckland Stadiums in accordance with its regular renewals programme.
A number of the Auckland Live Programme Development team attended Celebration of Auckland’s Māori identity as its the National Maori Hui, which was held in Auckland in September. This point of difference in the world for its visitors. provided a new platform for Auckland Live staff members to be a part of the Understanding and recognition of Te Ao Māori. conversation of the needs of Maori practitioners nationally. Auckland Live co presented The Beautiful Ones for eight performances in the Aotea Centre in November. This project was an ambitious work and received strong critical success from the industry and attendees. The project highlighted opportunities to develop Auckland Live’s approach to supporting Maori work and representatives of the team met with stakeholders in Wellington to look at future opportunities as a part of their 10-year strategy to tour Maori work to Auckland. Auckland Live offered use of space for the working group of Te Kupenga Toi o Tamaki in order to prepare for a February 2017 Auckland Hui. A number of projects for early 2017 have been programmed including a presentation of Hot Brown Honey for Pride Festival featuring Maori and Pacifika artists and Summer in the Square which featured activities including kai gardening workshops and over Waitangi Weekend, a Te Reo Maori metal band Alien Weaponry. These activities support Auckland Live’s goals of ensuring Maori cultural expression and visibility are represented in its high profile central city performing arts venues.
Auckland Conventions refers internal conference organisers to Ngati Celebration of Auckland’s Māori identity as its Whatua o Orakei and Auckland Museum for the opportunity to include point of difference in the world for its visitors. authentic Maori powhiri in conventions and event packages. RFA embracing the benefits arising from economic The ANZ Viaduct Events Centre was the venue for this year’s Tamaki partnerships with Māori. Herenga Waka Festival which took place over Auckland Anniversary weekend. This was a public event managed and funded by ATEED and supported by RFA with the venue provided free of charge.
Ngati Whatua o Orakei, Tainui, and RFA have had initial meetings to Celebration of Auckland’s Māori identity as its explore opportunities to collaborate on initiatives to further Maori economic, point of difference in the world for its visitors. cultural and social outcomes across the Auckland region. RFA embracing the benefits arising from economic, social and cultural partnerships with Māori.
The IMSB and local Iwi are recognised as key stakeholders in RFA’s Aotea Celebration of Auckland’s Māori identity as its Arts and Cultural Precinct and will be consulted as part of any overall point of difference in the world for its visitors. development.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 17 LOCAL BOARD ENGAGEMENT
November and December have been busy months for engagement with the new local boards following the local government elections in October. With 56 new elected board members and the majority of boards choosing new chairs and deputy chairs, it is important to ensure that all board members are well informed about RFA activities and developments.
All local board members have received the quarterly RFA newsletter and the quarterly report. Several boards have placed the report on a formal meeting agenda. Members have also received a media release regarding the summer stadium concerts, the RFA ‘Our Year’ publication, and the Summer in the Square programme.
There have been meetings with the Waitemata, Upper Harbour and Otara-Papatoetoe boards. An active working relationship with Waitemata Board is well established for this term of Council, and discussions for moving forward with the Western Springs precinct plan are underway.
RISK MANAGEMENT
RFA’s Enterprise Risk Management Framework sets out the principles and process for risk management. Quarterly risk workshops are undertaken with each of RFA’s business units, recorded in RFA’s risk database and reported through to the RFA Board and the Health, Safety and Risk Committee on a quarterly basis. Any risks assessed as high are required to have mitigations identified and these are reported to the Board.
RFA’s Capital Projects Sub-Committee also provides the Board with appropriate oversight of projects considered high public interest or risk.
No major changes have been made in the last quarter to RFA’s risk management, internal audit and external audit approaches. No new risks assessed as high have been identified since the last quarter. RFA is currently undertaking a strategic risk review.
RFA management is currently addressing improvements identified in internal and external audit findings, and progress is reported to RFA’s Audit Committee. The current audit issues do not impose any significant financial implications on the Auckland Council Group. Further, in accordance with the continuous disclosure requirement, there are no material items in this period that would require disclosure.
Regional Facilities Auckland Second Quarter Report – Quarter Ended 31 December 2016
Page | 18
Watercare Services Limited
Quarterly Report
Quarter ended 31 December 2016
Finance and Performance Committee
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 1 of 19 Table of Contents
• Executive Summary ...... 3 • Strategic issues and focus areas ...... 4 • Highlights for the last quarter ...... 7 • Future outlook ...... 9 • Infrastructure Project Updates ...... 9 • Financial Performance ...... 11 • Performance measures ...... 15 • Contribution to Māori outcomes ...... 17 • Key Local Board issues...... 18 • Risk Management ...... 19 • Disclosures ...... 19
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 2 of 19 Executive Summary
Watercare continued to strengthen engagement with customers and other stakeholders during the reporting period including the establishment of a forum for legal representatives of the development community.
Watercare continues to meet and work closely with Local Boards, community groups and associations to provide project updates and notifications regarding significant operational activity and approvals for works in local parks that require Local Board approval.
Financial Performance
Year to date revenue was $294m. The result was $12m favourable to budget primarily due to infrastructure growth charge revenue being favourable by $6.8m, vested asset revenue favourable by $5.9m, new developments revenue favourable by $1m and water and wastewater revenue favourable by $1.3m. This has been partially offset by other revenue, which was unfavourable by $2.7m mainly due to the reduction in FY16 subvention revenue from Auckland Council.
Non-Financial Performance
Performance against Statement of Intent (SOI) key performance indicators was good through the second quarter with all but one of the performance measures being met.
Risk Management
There were no substantial changes to the risks to Watercare operations during the quarter. The Watercare Executive Management Team regularly gives consideration as to the possibility of events that would trigger a requirement for continuous disclosure. There were no such events during the reporting period.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 3 of 19 Strategic issues and focus areas
Customer Focus • Lawyer Forum: Invitations were extended to lawyers who represent Developers to attend an annual focussed engagement forum. The forum was intended to share information, encourage two-way discussion, address any areas of particular concern and ultimately build trust. The forum was well attended and has been well received by the legal representatives of the development community.
• Trend of complaints: Watercare continues to see a decrease in the number of complaints from customers. This is primarily due to customer calls being managed through specialist teams as Watercare no longer operates a general call centre. Customer surveys have consistently suggested that customers wish to speak to informed and knowledgeable staff who understand their issues in the context of the services provided. Resolution via specialist teams has demonstrated that customer issues are solved in a more timely and efficient manner.
The focus on addressing all complaints through root cause analysis, and the implementation of business improvements and staff training to address issues highlighted, have reduced the number of complaints by more than 55% in the two prior years.
Business Excellence • Compliance with the Holidays Act 2003: In our last update (September 2016) we noted that Watercare had commissioned Ernst & Young to carry out an in-depth review of our compliance with the Holidays Act 2003. The review concluded that Watercare’s payroll system had not been configured to comply with some aspects of the Act and, therefore, payments relating to sick pay, bereavement leave, alternative holidays, and public holidays had been miscalculated for some staff. The Holidays Act 2003 is relatively straightforward with regard to calculating holiday pay and entitlements for workers with a regular working pattern but its application is complex when staff have a variable working pattern. The corrective payments required are therefore higher where Watercare’s staff carry out shift, casual and on- call work. Recalculations of the payrolls were completed in December 2016. The calculations were completed by Ernst & Young, and affected staff were paid in February 2017. The corrective payments fully discharge Watercare’s obligations under the Act, and our payroll system is now configured to fully meet the requirements of the Act.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 4 of 19 As part of the exercise we identified a contingent liability in relation to former staff and a process is now underway to determine how any claims from former staff will be approved and paid. The full value of the potential liability for ex staff was accrued by Watercare in December 2016.
• Safety Leadership Award: The safety culture developed and promoted by the Fulton Hogan John Holland Joint Venture (FHJHJV) on the Hunua 4 project was recognised by the industry at the Site Safe awards in November with FHJHJV being awarded the Kensington Swan Safety Leadership Award. The judges commended the team for their dedication to creating a strong safety culture on the Hunua 4 Watermain project, where they fostered a zero-harm culture with a number of initiatives including individual start cards, a spotter competency programme and the establishment of the "Golden Rules".
• Procurement: During the quarter Watercare executed an innovative procurement process for electricity. The process, a reverse auction, was the first of its size in NZ and achieved lower pricing than the previous agreement. Reverse auctioning is an innovative procurement approach which can assist in driving down prices in a flat market. Regional Facilities Auckland and the Eden Park Trust were also included as part of Watercare’s reverse auction.
Watercare also awarded a new contract for biosolids management services in September which resulted in significant savings.
Watercare also continues to work with Auckland Council in relation to co-source procurement.
Fully Sustainable • NIWA Secondment: NIWA has provided, at nil cost, a climate scientist to work with Watercare on secondment. Watercare will obtain updated climate information within the main water catchments and NIWA will be able to demonstrate practical use of some of their theories. Having done so, NIWA may be able to secure additional research funding from Central Government to develop new products to take to the market.
The secondment will be over the period March to May and will:
- Report on Watercare’s current use of weather and climate information to allow better forward planning of water supply augmentation projects;
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 5 of 19 - Provide a presentation on research into climatic drivers which will demonstrate what weather and climate patterns drive wet and dry spells for Auckland; and - Provide a summary of key case studies of how past events may have disrupted or impacted Watercare’s operations (with further emphasis on how outlooks and forecasting could have potentially minimised impacts). The intention is to highlight the linkages between weather and climate variability and water demand, water supply and water quality. This will help to jointly develop a plan for new prediction tools in the future if required.
• Huia Water Treatment Plant Capacity Restoration: The sustainable capacity of the Huia Water Treatment Plant has been increased from 65MLD to 90MLD following the installation and commissioning of the two new centrifuges in the solids handling process. The Water Treatment Plant is also capable of operating at peak flows of 110MLD. Further process works are underway to increase the sustainable capacity of the Water Treatment Plant to 110MLD and a peak capacity of 126MLD and are on programme to be completed by August 2017. This increase in capacity will allow greater resilience of the overall metropolitan water treatment plants and greater abstraction from the Huia supply lakes.
• Huia Water Treatment Plant Replacement: The Huia Water Treatment Plant and associated water transmission infrastructure is nearing 90 years-of-age, and needs to be replaced. As part of the process to identify a suitable site for a new water treatment plant, Watercare undertook a comprehensive site identification process using geographical information systems based on four key principles. Forty-four potential sites were identified for further assessment using a multi-criteria assessment method. This assessment looked into environmental, social, cultural and economic factors. The process ultimately resulted in three preferred options being selected for final consideration during the quarter. Watercare has owned the sites at Woodland Road and at Manuka Road for some years, and in November 2016 Watercare purchased the site at 130 Parker Road on the open market. Some forty letters were delivered in November 2016 to the owners of neighbouring properties, the Local Board and Local Councillors, advising that the property had been purchased as an option for the replacement Huia plant. Although there is no legal requirement for Watercare to have done that, Watercare wanted to be transparent and ethical in advising members of the public who might be affected, in the event the site in Parker Road was finally selected.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 6 of 19 If that were to happen, then specific layouts for the plant would be developed. There would be plans showing height, distance from boundary, landscaping proposals and other details. That proposal would be the subject of a detailed Assessment of Environmental Effects which would form the basis for consultation with those persons residing in the vicinity of the site, as well as the general public. Watercare’s consultation process intensifies as the possible sites were reduced in number which resulted in the meeting at Oratia on the evening of Tuesday 21 February in respect to the Parker Road sites, and at Titirangi on the evening of Wednesday 22 February 2017 in respect to the current site of the Huia Water Treatment Plant and the Manuka Road Site. Further open days are planned at both locations to enable Watercare to elicit additional comments from the public so that Watercare can incorporate the feedback into the decision making process. Feedback from the community open evenings will be taken on board and considered as part of the final decision making process.
• Sewer Blockages due to Fats, Oil and Grease Discharges from Industry: During the quarter, there were two prominent wastewater overflows as a result of sewer blockages resulting from an accumulation of fat that had been discharged from adjacent food premises. The first event occurred in Takapuna, where the overflow occurred in private property. The second event was at the Downtown Metrocentre/Civic complex, which required the centre to shut down while the sewer was unblocked.
Short term actions that have since been implemented have centred on the Watercare staff visiting food premises in the Takapuna business district and the Metrocentre/Civic complex educating them on the correct disposal of fat, oil and grease. Longer term solutions include working with Auckland Council to discuss the tracking of liquid wastes from business premises in the Auckland region. The potential benefits to Watercare are better knowledge of where, and how, liquid wastes are disposed, which will assist in ensuring that grease traps are maintained appropriately by tracking cleanout frequency and following up on exceptions.
Highlights for the last quarter Central Auckland Stormwater and Wastewater Network Optimisation Programme: In response to the Mayor’s Letter of Expectation, Watercare has established a Steering Group
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 7 of 19 for this work with joint representatives of Auckland Council and Watercare. The agreed overall objectives of the programme are to: • Develop in parallel the long-term network integrated strategies for the provision of stormwater and wastewater services in the Central Auckland area for inclusion in the draft 2018 Long Term Plan, including a breakdown of the cost and timings for all significant programme components; • Jointly support consultation on this strategy with the wider community, including the reasons for its selection; and to • Demonstrate exemplar behaviour in terms of Council organisations working together to solve problems and serve as a model for future collaborations.
Energy Efficiency Initiative: An ambitious energy efficiency initiative was launched during the period. Watercare is focussed on becoming a leader in energy efficiency by achieving the following: • energy neutrality at our two largest wastewater treatment plants by 2025 (which would be a world first for a plant the size of Mangere, Mangere is the 15th largest plant in the world); • efficiency gains of 8GWh by the end of 2018; and • greenhouse gas reductions meeting the NZ government target by 2030.
A programme of work is underway in support of achieving these targets. As part of this initiative, Watercare partnered with EECA and other external parties to hold an ‘Energy Week’ for staff during November. Energy week demonstrated Watercare’s commitment to becoming a leader in energy efficiency and reducing greenhouse gas emissions, and included an electric vehicle display. Watercare made a commitment to having at least 30 per cent of its replacement fleet being electric vehicles by 2019.
Transition of Mana Whenua Kaitiaki Forum: Watercare assisted with the transition of the Mana Whenua Kaitiaki Forum to a whole-of-Council model.
Marae & Maori Protocol Workshops: Watercare engaged with representatives of Ngai Tai Iwi to offer Marae and Maori protocol workshops for staff. The workshops were held at Umupuia Marae.
Office of the Auditor General (OAG) – Service Performance Review: As reported in Watercare’s previous update (in September 2016), the Office of the Auditor General (OAG) completed a review of Watercare’s service performance which reflected positively on the improvements made in key customer related processes over the past two years. The OAG report provided positive comment on Watercare’s improved customer communications processes, and the quality and timeliness of information provided on tariff regimes and price
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 8 of 19 changes. It also provided positive feedback on improvements in communication on meter readings processes; the Debt Management Code of Practice, and the enhanced customer satisfaction surveys achieved under the Voice of the Customer process. The recommendations made in the 2016 report are relatively minor and are being addressed by Watercare as part of its ongoing improvements.
After the OAG report was tabled with Parliament on the 11th of October, the OAG was called to present to the Local Government and Environment Select Committee on the 8th of December 2016 on the follow up report on Watercare. The Local Government and Environment Select Committee were comfortable that there was nothing in the report of any concern.
Ardmore Water Treatment Plant, and Rosedale Wastewater Treatment Plant, tours: Public tours of Rosedale and Ardmore treatment plants were held on 19 and 26 November respectively, attracting over 180 visitors. Post-event feedback was very positive. Upper Harbour Local Board Member Uzra Balouch emailed following the Rosedale tour to say: “I just wanted to thank you and the Watercare team for a very informative tour of the plant. I was very impressed by Vasan and Daniel’s knowledge and the time they took to answer our questions. What an outstanding job you all do for us. Thank you.”
Future outlook Statement of Intent: Preparation on Watercare’s 2017-20 Statement of Intent is now underway following receipt of the Mayor’s Letter of Expectation at the end of last year. Lake levels: Rainfall during November was well above average across the Auckland region, however, well below average in December. The remainder of summer will have normal or below normal rainfall, along with average or above average temperatures. The soil moisture levels were well below average in January, and therefore will take significant rainfall to occur before recharge of the storage lakes occurs in the coming winter.
Infrastructure Project Updates Hunua 4 Watermain: The contract for the final section of the Hunua 4 Watermain from Market Road to Watercare’s Khyber Reservoirs on Upper Symonds Street has been let. Tenders were sought for traditional open cut construction and an alternative trenchless solution. A contract has been let to proceed with the detailed design, and then the construction (subject to resolution of design details and consenting) of a trenchless solution. This is an innovative solution with 90% of the pipe being installed by trenchless technology, as opposed to the original concept that had 90% delivered via trenching in heavily congested roads through Epsom, Newmarket and Mount Eden. This solution will minimise disruption to local residents, businesses and traffic.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 9 of 19 North Harbour 2 Watermain and Northern Interceptor: An application for resource consents and a Notice of Requirement were lodged in May 2016. A hearing for the Notice of Requirement for the North Harbour 2 watermain and the shared corridor section of the Northern Interceptor was held in November 2016. The resource consents were granted in January with favourable conditions. The decision on the Notice of Requirement is due February 2017. Franklin Road Sewer and Stormwater Separation: Following the suspension of the construction works in Franklin Road for the Christmas lights and New Year periods, these works have recommenced. On-going co-operation between Watercare, Healthy Waters, Vector, Auckland Transport and other stakeholders is resulting in co-ordinated activities and positive feedback from the local community.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 10 of 19 Financial Performance
$’m FY17 Q2 FY17 Q2 Variance YTD YTD Actual YTD Budget
Operational Revenue 294 282 12 AC funding - - - Expenditure excluding 142 148 6 depreciation Depreciation and 114 113 (1) amortisation
Capital Expenditure 152 172 20 Net borrowings - AC 1,333 1,309 Net borrowings - 281 303 (2) External
Revenue Year to date revenue was $294m. The result was $12m favourable to budget primarily due to infrastructure growth charge revenue favourable $6.8m, vested asset revenue favourable $5.9m, new developments revenue favourable $1m and water & wastewater revenue favourable $1.3m. This has been partially offset by other revenue, which was unfavourable $2.7m mainly due to the reduction in FY16 subvention revenue from Auckland Council (refer to section entitled “Tax Loss Offsets”).
Expenditure Operating expenses were $142m, $6m favourable to budget with favourable variances for asset operating costs, maintenance costs, professional services and general overheads. These are ahead of the savings target set by the Board for management to achieve from efficiencies. These savings were partially offset by higher labour costs. Interest expense was $0.4m favourable.
Depreciation and amortisation Depreciation and amortisation was $1m unfavourable mainly due to accelerated depreciation on assets identified for disposal.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 11 of 19 Capital expenditure Capital expenditure was under budget by 11.6% due primarily to deferral, delayed start or savings to projects. These delays or deferrals have no material impact on current or future services provided by Watercare.
Borrowings Overall net borrowings were $2m above budget due primarily to the timing of payments at June 2016 year end.
Water Utility Consumer Assistance Trust (WUCAT) The following table summarises the results of the Trust since it started in 2011/12: WUCAT Summary
Trust approved applications Financial year (includes WSL additional write offs) $000's
Jun-12 33 $ 29 Jun-13 172 $ 196 Jun-14 123 $ 114 Jun-15 150 $ 149 Jun-16 118 $ 90 (YTD) Jun-17 54 $ 48 Total 650 $ 625
When the Trust approves hardship relief, it enters into an understanding with the customer as to how the customer will “earn” the relief. Often this might be that the customer agrees to pay their monthly bill for (say) six months, at the end of which all outstanding debt or arrears at the date the arrangement was entered into is agreed to be written off.
Most customers satisfy their obligation and the old debt is written off. Some customers, however, do not meet their obligations and therefore no write off occurs. At any point in time there will be a number of customers in the process of satisfying their side of the arrangement.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 12 of 19 Summary of WUCAT Arrangement Approvals
No. of No. of No. of No. of Arrangements Arrangements Arrangements Arrangements Entered Into Fully Satisfied Still Being Met Lapsed Unfulfilled 650 497 74 79
Amount of Relief Amount of Relief Relief Yet to be Relief Voided due Approved Fully Earned Fully to $ $ Earned Lapsed Unfulfilled $ Arrangement $ $625k $517k $52K $56k
The results of the last 3 WUCAT meetings have seen 28 applicants successfully complete the budget process and have $25k of hardship relief approved by the Trust.
WUCAT Summary last 3 meetings
Month Trust approved applications $000's
Oct-16 6 $ 8.56 Nov-16 11 $ 8.05 Dec-16 11 $ 8.79 Total 28 $ 25
Restrictions The status of restrictions as at 31 December 2016 was as follows:
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 13 of 19 Tax Loss offsets Watercare is a taxable entity with a significant balance of tax losses due primarily to depreciation on pipes being allowed to be deducted for taxation purposes at a faster rate than is reflected in our financial accounts.
Watercare has agreed to provide tax losses to Auckland Council on an annual basis to assist the Auckland Council group in minimising our collective tax exposure. This financial year is the 6th year that Watercare has been providing tax losses to Auckland Council.
The intent of the offset transactions has been to shield the Auckland Council group from paying tax which results from Ports of Auckland taxable income. Auckland Council have benefited by $40 million to date from Watercare’s provision of tax losses which is shown in the summary below.
Subvention income and tax loss offset summary
Summary Actual Actual Actual Actual Actual Forecast Total Taxation income year 30/06/2012 30/06/2013 30/06/2014 30/06/2015 30/06/2016 30/06/2017 Total tax loss offset 27,786,005 42,560,214 67,186,659 42,689,802 30,741,815 49,000,000 259,964,495 - Tax effect @ 28% 7,780,081 11,916,860 18,812,264 11,953,145 8,607,708 13,720,000 72,790,059 Payment to Watercare 3,501,037 5,362,587 8,465,519 5,378,915 3,873,469 6,174,000 32,755,526 Benefit to Auckland Council 4,279,045 6,554,273 10,346,745 6,574,230 4,734,240 7,546,000 40,034,532
Watercare must receive a reasonable payment for the tax losses it makes available to Auckland Council to ensure compliance with Section 57 of the Local Government (Auckland Council) Act 2009. Section 57 states that Watercare must be a minimum cost provider and must not pay a dividend or distribute any surplus either directly or indirectly to its shareholder. The current agreement is that Watercare receives 45 cents for every dollar of tax losses which it provides to Auckland Council who benefit by 55 cents in the dollar through the non-payment of tax.
Watercare needs to be cognisant of the forecast future date when tax losses will be fully utilised and Watercare will be in a tax paying position as the value of the tax losses to Watercare increases the closer the company gets to a tax paying position. As Watercare gets closer to a tax paying position the cost at which Watercare will transfer tax losses will need to increase above the current 45 cents in the dollar to ensure a “fair value” or reasonable payment is being achieved.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 14 of 19 Performance measures
2016/17 Measure Oct 2016 Nov 2016 Dec 2016 Target The extent to which the local authority's drinking water supply complies with part 4 of 100% 100% 100% 100% the drinking-water standards (bacteria compliance criteria) The extent to which the local authority's drinking water supply complies with part 5 of 100% 100% 100% 100% the drinking-water standards (protozoal compliance criteria) ≤ 2 overflows Average number of wet weather overflows per year per Annual Annual Annual per discharge location engineered Measure Measure Measure overflow point The number of dry weather overflows from the territorial authority's sewerage system, ≤10 0.03 0.03 0.03 expressed per 1000 sewerage connections to that sewerage system Compliance with the territorial authority's resource consents for discharge from its sewerage system measured by the number of: a) ≤2 a) abatement notices b) ≤2 0 0 0 b) infringement notices c) ≤2 c) enforcement orders d) ≤2 d) convictions received by the territorial authority in relation to those resource consents Median response time for attendance for urgent call-outs: from the time that the local ≤ 60 mins 43 mins 42 mins 42 mins authority receives notification to the time that service personnel reach the site. Median response time for resolution of urgent calls-outs: from the time that the local authority receives notification to the time ≤ 5 hours 3.2 hours 3.2 hours 3.2 hours that service personnel confirm resolution of the fault or interruption Median response time for attendance for non-urgent call-outs: from the time that the ≤ 3 days 2.7 days 2.1 days 1.9 days local authority receives notification to the time that service personnel reach the site
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 15 of 19 Median response time for resolution of non- urgent call-outs: from the time that the local authority receives notification to the time ≤ 6 days 4.2 days 4.0 days 3.6 days that service personnel confirm resolution of the fault or interruption Percentage of customers surveyed satisfied with Watercare's delivery of water and ≥80% 81.4% 81.4% 81.4% wastewater services The total number of complaints received by the local authority about any of the following: a) drinking water clarity b) drinking water taste c) drinking water odour ≤ 10 5.6 5.8 5.9 d) drinking water pressure or flow e) continuity of supply f) the local authority's response to any of these issues expressed per 1000 connections to the local authority's networked reticulation system Attendance at sewerage overflows resulting from blockages or other faults: median response time for attendance - from the time ≤ 60 mins 48 mins 48 mins 49 mins that the territorial authority receives notification to the time that service personnel reach the site Attendance at sewerage overflows resulting from blockages or other faults: median response time for resolution - from the time that the territorial authority receives ≤ 5 hours 3.0 hours 3.0 hours 3.0 hours notification to the time that service personnel confirm resolution of the blockage or other fault The total number of complaints received by the territorial authority about any of the following:a) sewerage odour b) sewerage system faults c) sewerage system blockages ≤ 50 21.8 22.0 22.1 d) the territorial authority's response to issues with its sewerage system expressed per 1000 connections to the territorial authority's sewerage system Percentage of complaints being 'closed and resolved' within 10 working days (12 mth ≥95% 92.9% 93.9% 94.10% rolling average) Percentage of the 19 Iwi groups throughout ≥60% 15.7% 15.7% 15.7% Auckland that Watercare have entered into a
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 16 of 19 Memorandum of Understanding with (target for end of FY16/17) Lost-time injury frequency rate per million ≤5 1.25 1.26 1.24 hours worked (12 month rolling average) Percentage of voluntary leavers relative to number of permanent staff (12 mth rolling ≤12% 11.19% 10.66% 10.70% average) Total recordable injury frequency rate per million hours worked (12 month rolling ˂30 16.94 14.45 14.3 average) Minimum funds flow from operations to interest cover (FFO) before any price ≥2.5 3.91 3.98 3.92 adjustment Percentage of household expenditure on water supply services relative to the average ≤1.5% 0.87% 0.87% 0.88% household income The average consumption of drinking water 272 + / - per day per resident (gross PCC) (12 month 273 272 272 2.5% rolling average) Two month lag The percentage of real water loss from the on data local authority's networked reticulation ≤13% 13.2% 13.2% sourced system (rolling 12 mth average) from meter readings
Contribution to Māori outcomes
During this Quarter the focus has been upon formalising and re-invigorating friendship relationships and engagement with the 19 mana whenua entities by the preparation and making contact with those mana whenua who do not have a formal relationship agreement with Watercare. Initiative - Water How it Progress Q2 Supply and contributes to Spend Wastewater Māori outcomes
Following the divestment of administrative Mana Whenua Kaitiaki MO3 Rangatiratanga $32,970 Forum self-determination support in favour of Auckland Council of the Mana Whenua Kaitiaki Forum, Watercare Māori knowledge and MO4 Te Tiriti o continues with the Watercare Kaitiaki Waitangi/the Treaty world views are Managers’ Group (WKMG). WKMG of Waitangi continues the general overview of projects respected and its and issues of regional significance.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 17 of 19 validity and value MO7 acknowledged Mātauranga Māori – Māori knowledge wisdom
MO8
Mana Whenua – customary authority
Iwi Engagement on MO1 Watercare has a policy of integrating Mana $255,051 Watercare Projects Whenua into its projects where Mana Kaitiakitanga – Whenua have an interest. Currently Watercare is processing 109 RMA consent Robust engagement guardianship including stewardship applications/project formulation and framework for Iwi evaluation. Watercare continues to expand its relationships with Mana Whenua to Authority resource MO2 Mātauranga promote accessibility and engagement by management staff to Māori – Māori various means including Mana Whenua be actively involved in knowledge wisdom working parties, workshops, the Kaitiaki Managers Group, education, commercial the planning and evaluations and cultural training. operational There has been a positive increase in performance of water Waahi tapu –sacred staff/Mana Whenua time spent assessing ancestral sites and and wastewater and discussing matters raised by Mana places of significance Whenua throughout the Watercare project infrastructure to iwi, hapū and life cycle. whānau
MO7
Mātauranga Māori – Māori knowledge wisdom
Key Local Board issues
Following the 2016 local body elections, and the inauguration ceremonies, the local board chairs and members began focusing on general business including the development of the new local board plans. A letter of congratulations and introduction was sent to the local board chairs from the Chief Executive of Watercare, along with information on Watercare and a summary of future investment identified in the water and wastewater asset management plan. A copy of Watercare’s local board Engagement Plan was also included. This plan outlines
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 18 of 19 the way in which Watercare work proactively with local boards and its commitment to provide information in the interest of no surprises. Watercare joined Auckland Transport, Waiheke local board members, Iwi and other stakeholders for a visioning strategy related to the Matiatia gateway. Maungakiekie Tamaki local board members also joined local Iwi, Auckland Transport and Watercare staff for a dawn blessing focused on Van Dammes lagoon where Watercare undertook work to strengthen the Eastern Interceptor.
Several local boards in the central area received notification of network overflow incidents. Watercare and Auckland Council staff cooperated in the response which in several incidents involved improper fat disposal from eateries in Takapuna.
Rodney and Hibiscus and Bays local boards held a workshop with Auckland Council and CCO staff in preparation for the development of their Local Board Plans. Other local boards will hold similar workshops in 2017. Watercare is working with the Local Board services staff to input to these plans as required.
Risk Management
Watercare has an established risk management policy and framework which follows the guidance of the ISO 31000 risk management standard. Risks are therefore identified and evaluated using likelihood and consequence scores, and ranked. The highest ranked and significant emerging risks are reviewed by senior management and the Board via management and Board level reporting.
There have been no substantial changes to Watercare’s risk in the reporting period. The Internal Audit function produces an annual plan which is approved by Watercare’s Audit and Risk Committee and there is quarterly reporting by management against the plan for the Committee.
The Audit and Risk Committee maintains oversight of progress by management in implementing the recommendations arising from Internal Audit’s work. The Committee is satisfied that all matters raised are being addressed by management.
Disclosures
The Watercare Executive Management Team regularly gives consideration as to the possibility of events that would trigger a requirement for disclosure. There were no such events during the reporting period.
Watercare Quarterly Report - Quarter ended 31 December 2016 Page 19 of 19