CORPORATE AND FINANCIAL COMMITTEE
AGENDA
FRIDAY 8 MARCH 2013
AT 9AM
IN THE NO 1 COMMITTEE ROOM, CIVIC OFFICES
Committee: Councillor Helen Broughton (Chairperson), Councillors Ngaire Button, Tim Carter, Jimmy Chen, Jamie Gough and Yani Johanson
Principal Adviser Committee Adviser Paul Anderson Rachael Brown Telephone: 941-8528 Telephone: 941-5249
PART A - MATTERS REQUIRING A COUNCIL DECISION PART B - REPORTS FOR INFORMATION PART C - DELEGATED DECISIONS
INDEX
ITEM DESCRIPTION PAGE NO. NO.
PART C 1. APOLOGIES 3
PART B 2. DEPUTATIONS BY APPOINTMENT 3
PART A 3. CHRISTCHURCH ECONOMIC DEVELOPMENT STRATEGY – ALAN BYWATER 5
PART A 4. PERFORMANCE REPORT FOR THE SIX MONTHS TO 31 DECEMBER 2012 99
PART A 5. EARTHQUAKE FINANCIAL REPORT FOR DECEMBER 2012 133
PART A 6. EARTHQUAKE FINANCIAL REPORT FOR JANUARY 20 141
PART A 7. SALE OF EXISTING PRESCHOOL BUILDING TO BISHOPDALE COMMUNITY PRESCHOOL ASSOCIATION 149
PART A 8. RICCARTON BUSH TRUST – APPOINTMENT OF TRUSTEES 155
PART A 9. 2012/13 HALF YEAR FINANCIAL STATEMENTS FOR CIVIC BUILDING LIMITED, VBASE LIMITED, TUAM LIMITED, WORLD BUSKERS’ FESTIVAL TRUST, CHRISTCHURCH AGENCY FOR ENERGY TRUST, ROD DONALD BANKS PENINSULA TRUST AND RICCARTON BUSH TRUST 157
PART A 10. DRAFT STATEMENTS OF INTENT FOR CIVIC BUILDING LIMITED, TUAM LIMITED, WORLD BUSKERS’ FESTIVAL TRUST, ROD DONALD BANKS PENINSULA TRUST AND RICCARTON BUSH TRUST 223
PART C 11. RESOLUTION TO EXCLUDE THE PUBLIC 291
We’re on the Web! www.ccc.govt.nz/Council/Agendas/ 2 3
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
1. APOLOGIES
2. DEPUTATIONS BY APPOINTMENT
Nil.
4 5
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
3. CHRISTCHURCH ECONOMIC DEVELOPMENT STRATEGY – REVISION 2013
General Manager responsible: General Manager Strategy and Planning, DDI 941-8281 Officer responsible: Manager Strategic Policy Unit Manager Author: Alan Bywater, Manager Strategic Policy Unit Manager
PURPOSE OF REPORT
1. This report seeks the Council’s endorsement of the 2013 Revision of the Christchurch Economic Development Strategy (CEDS) (Attachment 1).
EXECUTIVE SUMMARY
2. In 2009-10 the Canterbury Development Corporation (CDC) developed the first version of the CEDS with input from Council staff. This was formally endorsed by the Council as the economic development strategy for the Christchurch city in July 2010.
3. Since that time a number of factors affecting the Christchurch economy have changed, not the least of which are the affects of the earthquakes, the global financial crisis/ economic slow down, central government’s Business Growth Agenda and the Canterbury Earthquake Recovery Authority’s (CERA) Economic Recovery Programme.
4. The CDC has now carried out a review of CEDS taking these changes into account and supplementing the largely bottom-up thinking of the original version with more macro-economic thinking.
5. The main areas of change in the new version of the CEDS are as follows:
The CEDS 2013 considers the benefits to the city economy of agriculture and other aspects of the region’s economy. It recognises that the economy of the city cannot be considered without considering the regional economy. The CEDS 2013 revision identifies priorities. The Big Five Gross Domestic Product Game Changers (The Big 5). These are the things that have the potential to make a step change in the City’s economy. A number of initiatives are also identified that are essential for maintaining baseline growth (1.9 percent per annum) - Keeping the City Competitive.
6. The CEDS 2013 revision promotes:
economic growth that improves quality of living a macro view of all projects that are improving the economy (over 70 projects), not just what the CDC does (over 25 projects) the CDC playing both a leadership and co-ordination role; leading projects that it is the logical lead for, and co-ordinating oversight of the whole programme Gross Domestic P roduct (GDP) by 2031 could be 54 percent higher than today if we, as a community, execute The Big 5 and Keeping the City Competitive projects well a higher performing economy will likely lead to stronger population growth a major risk for Christchurch is that failing to retain business and working age population will likely result in a declining economy costing the region $54 billion in lost productivity. 6
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
3 Cont’d
7. It should be noted that the CEDS is the economic development plan for the city, not just for what the CDC and the Council do. Clearly it cannot be achieved without support and buy-in from a range of businesses and other organisations. The CDC has been building support for the implementation of the CEDS through its ongoing work in the City and in particular through the process it has used to review the CEDS.
8. Maintaining and improving the quality of life for people living and working in Christchurch is a very important element of the achieving economic development objectives identified in the CEDS. A wide range of the Council’s activities that support enhancing quality of life therefore compliment the CEDS.
9. The CEDS 2013 revision should be read in conjunction with the Background Paper (Attachment 2) as the assumptions and decisions in the CEDS are informed by this paper.
FINANCIAL IMPLICATIONS
10. There are no direct financial implications from this report.
11. It is likely that the CDC or other parties will identify ways in which the Council can further support the implementation of CEDS over time, which may have financial implications. These will be considered on a case-by-case basis through the Annual Plan or future LTPs.
Do the Recommendations of this Report Align with 2009-19 LTCCP budgets?
12. As above.
LEGAL CONSIDERATIONS
13. This is a non-statutory strategy that the Council is being asked to endorse. Consequently there are no legal implications of this report.
Have you considered the legal implications of the issue under consideration?
14. As above.
ALIGNMENT WITH LTCCP AND ACTIVITY MANAGEMENT PLANS
15. See below.
Do the recommendations of this report support a level of service or project in the 2009-19 LTCCP?
16. There is a level of service within the Christchurch Economic Development and Coordination Activity Management Plan for 2012/13 as follows: Christchurch Economic Development Strategy (CEDS) fully revised with earthquake filter by 30 June 2013. Clearly this report directly relates to the achievement of that level of service.
17. The levels of service in the Christchurch economic development and coordination activity management plan for the Three Year Plan 2013-16 are consistent with the revised CEDS and it is not anticipated that changes to these levels of service will be necessary as a result of the revised strategy.
ALIGNMENT WITH STRATEGIES
18. The report is recommending the endorsement of a strategy.
19. The revised CEDS is consistent with community outcomes in the Draft Three-Year Plan. It has a particularly strong relationship to those outcomes in the Prosperous Economy area.
7
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
3 Cont’d
20. The CEDS is consistent with, but different from, the CERA Economic Recovery Programme (ERP). The CEDS is a long term development strategy which must consider the recovery. Whereas the ERP is a recovery programme which must consider the long term economic drivers.
Do the recommendations align with the Council’s strategies?
21. As above.
CONSULTATION FULFILMENT
22. As part of the development of the original CEDS in 2009-10 very extensive consultation was carried out and surveys were undertaken, particularly with businesses and the business sector. The results of this original consultation remain embedded within the revised CEDS.
23. In addition, the CDC has carried out further consultation including a number of participative and interactive workshops that focused on different strategic areas to test and refine the initial thinking in the revised CEDS document.
24. On 8 February 2013 the CDC presented its draft version of the revised CEDS to this committee and members were invited to submit any feedback via email to the report author. This opportunity was also extended to councillors who are not members of the committee.
STAFF RECOMMENDATION
It is recommended that the Committee recommend to the Council that it endorse the Canterbury Economic Devlopment Strategy 2013 Revision.
ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 8
CHRISTCHURCH ECONOMIC DEVELOPMENT STRATEGY
2013 REVIEW
Date of Creation: 14 December 2012
Last Saved on: 25 February 2013
Author: Steve Perdia
Filepath: p:\ceds 2012 refresh\strategy document\ceds - january 2013 v9.docx
PO Box 2962, Christchurch 8140 +64 3 379 5575 Level 1, 99 Cashel Street, Christchurch 8011 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 9
2013 Review
1. EXECUTIVE SUMMARY ...... 3
2. INTRODUCTION ...... 4
3. THE STRATEGIC FRAMEWORK ...... 6 VISION ...... 6 GOALS ...... 6 ECONOMIC DEVELOPMENT PRIORITIES ...... 6 ACTION PLAN ...... 7
4. ECONOMIC DEVELOPMENT ACTIONS ...... 9
5. POSSIBLE GROWTH FUTURES FOR CHRISTCHURCH ...... 13
6. MONITORING ...... 14
7. ADDITIONAL INFORMATION ...... 15
8. GLOSSARY OF TERMS ...... 16
Page | 2 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 10
2013 Review
1. EXECUTIVE SUMMARY
The Christchurch Economic Development Strategy (CEDS) brings together the views of various businesses and agencies in the region to identify ways in which to optimise our economy so that by 2031 Christchurch has a higher quality of life, better income, greater employment and is a vibrant and growing city attracting people from around the globe. The Canterbury Development Corporation (CDC) is funded by the Christchurch City Council (CCC) to facilitate this consultation and review the strategy following the Canterbury earthquakes of 2010 and 2011.
Understanding and plotting an economic trajectory in a post-earthquake environment has been a complex and challenging task, and we expect to continue learning over the upcoming years.
What we know is that there are several possible economic futures for Christchurch City which will be determined by the decisions and investment choices made today. This Strategy is a guide to maximise those opportunities.
The CEDS process has identified five large-scale opportunities which have the potential to step-change our economy - ‘the Big 5’. In addition, there is a longer list of development initiatives which are required to ‘Keep the City Competitive’ with other cities and regions. Successful implementation of the Strategy has the potential to place GDP 54% higher than it is today, by 2031.
The Strategy attempts to capture and represent all projects in the region that return economic development outcomes to the city. It recognises the relationship between the regional economy and the city. It lists the projects currently under way and new projects which are key to the development of the economy.
This approach makes it a broad plan, but provides a clearer strategic perspective and better understanding of the interdependencies between economic development projects and the various agencies and businesses that lead or are involved in them. A key component is the integration of this Strategy with earthquake recovery planning managed by the Canterbury Earthquake Recovery Authority (CERA). In particular there has been substantial effort to integrate CEDS with CERA’s Economic Recovery Plan (ERP) to ensure they are consistent and complementary.
CDC has multiple roles to play in the realisation of CEDS:
Ensure that the major opportunities are realised Lead some projects in areas where it has recognised expertise Participate in projects led by other agencies, where CDC can add value Ensure private sector involvement in all projects Monitor and report overall economic progress and advocate on behalf of the Christchurch City economy
Page | 3 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 11
2013 Review
2. INTRODUCTION
The Canterbury Development Corporation (CDC) prepares and reviews the city’s economic development strategy on behalf of the Christchurch City Council.
Local government’s role in economic and business development complements its role in providing a better quality of life for residents. The city’s community outcomes1 are to provide a liveable city, prosperous economy, strong communities, good governance and a healthy environment.
The purpose of the Christchurch Economic Development Strategy (CEDS) is to identify long-term growth goals and priorities to 2031 that will create a better quality of life and strong and prosperous economy. By setting a common course, engaging with the business community and investing in shared goals, better economic outcomes will be achieved.
The initial version of CEDS was completed in September 2010 just before the first earthquake. It involved a large-scale research and consultation process (economic modelling; 120 businesses surveyed face to face; 600 businesses interviewed by telephone; workshops). It was not fully released but provided a pre- earthquake snapshot of the economy, its drivers and opportunities for improvement.
Since 2010, the economy of Christchurch and the wider region has been significantly affected by the earthquakes. The resulting temporary and permanent resource and industry relocation is a key context- changer, along with the continuing effects of the global financial crisis. The CEDS review adjusts for these changes. It also recognises the economic value of the rural sector to the city and amendments to the Government’s Business Growth Agenda.
CEDS should be read in conjunction with the Background Paper2. The Background Paper collates and synthesises macro-economic data, statistics, trends, forecasts and research relevant to the city and regional economy. The Background Paper includes sections on GDP, the labour market, sector performance and earthquake effects. It establishes an Australasian benchmarking framework and forecasts possible economic futures. It provides the background detail to assumptions and decisions made in CEDS.
Growing GDP matters to the economy and the community. It leads to greater employment and career opportunities, higher average wages and better city facilities and services. It can also lead to greater community wellbeing.
CEDS takes a regional view of economic activity that benefits the city. Christchurch City evolved as a hub for regional primary production, processing and export and it continues to support regional production through sectors such as business services, logistics, research and development and manufacturing. The city economy can not be considered without considering its relationship with the wider region, in particular the agriculture sector. This view is intended to encourage agencies across boundaries to collaborate on regional and national economic development projects.
CEDS has been developed alongside the Economic Recovery Programme (ERP) which is a key pillar of the overall CERA recovery strategy for Greater Christchurch. CEDS is a long-term economic development
1 Christchurch City Council Long Term Plan, www.ccc.govt.nz 2 CDC economic research paper available online at www.cdc.org.nz
Page | 4 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 12
2013 Review strategy and the ERP is a recovery-focused programme. The integration process has been actively managed through staff secondments, project groups and information sharing between CDC, CERA and other agencies. CDC has been involved in the development of CERA’s Recovery Strategy as a standing member of the Partnership for Economic Prosperity and Recovery (PEPR) Group. CDC has also provided staff on a secondment basis to the CERA Infrastructure Team, Economic Recovery Team and the planning process for workforce recovery. In addition, CDC staff advised on the CBD Blueprint.
Page | 5 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 13
2013 Review
3. THE STRATEGIC FRAMEWORK
VISION
Our vision for the economy of Christchurch is that in 2031 Christchurch is recognised as the best place for business, work, study and living in Australasia.
GOALS
To achieve the vision, by 2031:
Christchurch has the best economic ranking against Tier Three cities in Australasia3. Quality of living matches a Tier Two city in Australasia Total GDP has grown by 53% to $15.4bil4 (GDP per capita by 27%5) Exports to China have increased by 140%, reaching $719mil6 by 2031 In 2031, 20% of the working age population is employed in high-growth sectors : High Value- Added Manufacturing; Technology; Professional Services; Agritech and Health Care Services The proportion of the working age population with a post-high school qualification has increased from 40% to 45%. The proportion of the working age population with a Bachelor qualification or higher has increased from 20% to 26%
ECONOMIC DEVELOPMENT PRIORITIES
Christchurch’s economic growth and development priorities are split in to two sections:
1. The ‘Big 5’ GDP Game Changers: If these opportunities are maximised it would move the economy off the projected baseline growth path and improve the city’s chances of success in the attraction of migrants and retention of residents, further strengthening economic growth.
Maximising earthquake recovery opportunities: Earthquake recovery spending on new infrastructure, facilities and buildings is mostly in the local economy (~$30bil between 2011-2018)
Effective water resource management: Increasing irrigation potential and productivity in the Canterbury Plains but not at the expense of the environment
Improving productivity through innovation: Businesses using new ideas, the latest technology, new buildings and modern working techniques to improve productivity and develop a competitive Game Changers The “Big 5” GDP GDP 5” “Big The edge (~$135mil per annum from 2015 and continuing to improve)
3 Australasian city hierarchy model; refer Background Paper section 1 4 All figures in real terms (excluding inflation adjustments) 5 The increase in GDP per capita is lower than GDP, reflecting the increase in population over the same period 6 In 95/96 dollars
Page | 6 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 14
2013 Review
Successful central city design and build: Creating a culturally attractive and vibrant city centre that attracts new businesses and people, and improving productivity in a more condensed CBD (4% productivity gain within the CBD from 2018)
Increased exports and improved distribution networks: Meeting the Government’s China export growth targets (additional ~$40mil per annum from 2015)
2. Initiatives that keep the city competitive with other cities: Cities, much like organisations, need to find ways to continuously improve their operating environment to remain competitive and create periods of competitive advantage over other cities. Large step changes in GDP are unlikely to result from these initiatives, but they are important in terms of retaining a competitive proposition for businesses and the labour force.
Workforce: Addressing the aging population, developing solutions for local labour and skills shortages and increasing workforce productivity
Supporting Innovation: Supporting innovation and commercialisation and enhancing the linkages between the research community and business community.
Making it easier to do business: Ensuring regular dialogue between the private and public sector petitive to ensure the regulatory environment and process is as easy as possible to engage with
Infrastructure: Ensuring infrastructure and land use decisions support economic growth
Connections and Business Networks: Improving Christchurch’s connectedness at a local, national and international level enhancing the ability to do business and share ideas
Investment Vehicles: Improving access to capital for local businesses
Sector Development: Developing growth sectors within the economy (Technology, Health, High Value-Added Manufacturing, International Education, Professional Services and Agritech) and Keeping the City Com the City Keeping managing sector level market failures in the economy
Business Development: Creation, growth, capability, retention and attraction of business to the region
ACTION PLAN
The CEDS Action Plan outlines projects across the region that can improve economic opportunities and provide economic benefits to the city. Businesses and agencies have told us what’s being done and what needs to be done and CDC has integrated that with its thinking.
There are a total of 73 projects listed of which 27are new project ideas.
The Action Plan below outline projects and activities that contribute to economic development and achieving the CEDS goals. It will evolve and change over-time, incorporating new project ideas and work programmes that benefit the Christchurch economy.
Page | 7 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 15
2013 Review
CDC has multiple roles in CEDS. It will lead some projects in areas where it has recognised expertise and participate, where appropriate, in projects led by other organisations. It will ensure that there is private sector involvement in all projects and that major opportunities are realised.
The CDC Project Management Office (PMO) is responsible for implementation and monitoring of the city’s economic development programme and periodically reviewing the CEDS document. PMO progress reports will give the business community a strategic view of all economic development projects that benefit the city economy.
Page | 8 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 16
2013 Review
4. ECONOMIC DEVELOPMENT ACTIONS
Key CDC projects New project CDC to facilitate project development Project in progress Another agency’s project Completed project
“The Big 5” GDP Game Changers Actions Lead Agency Status
Secure public sector funding for the rebuild of Christchurch (infrastructure, facilities, buildings) CERA In progress
Develop and promote an investment proposition and proposals to showcase opportunities in greater CERA In progress Christchurch (ERP 6)
Ensure issues over availability of insurance and resolution of claims do not hinder investment or CERA In progress slow the rebuild, and on-going insurance cover is provided under the new risk profile (ERP 8)
Facilitate a City Image Group to ensure a cohesive transitional city image for use in the attraction To be 1 New and retention of people, visitors, businesses and investment determined
Identify opportunities for designing new buildings to enable foreseeable future technological To be New developments and facilitate the realisation of these opportunities determined
Support a thriving and prosperous economy for greater Christchurch through effective and efficient CERA In progress integrated infrastructure networks (ERP 14)
Maximising earthquake recovery earthquake opportunities Maximising Redevelop suburban centres and towns in greater Christchurch (ERP 13) CCC In progress
Implement the Canterbury Water Management Strategy – develop and deliver the Regional Environment Implementation Plan (RIP), Zone Implementation Plans (ZIPs) and the Canterbury Land & Water In progress Canterbury Regional Plan
Develop understanding of the quantum of benefits possible from improving management of existing anagement irrigation infrastructure and developing new irrigation infrastructure and support projects and CDC In progress programmes to deliver the benefits
2 Research into potential economic gains from crop diversification, added value processing of rural To be
resource m resource New products and technology innovation to improve nutrient management determined ater ater To be Develop a business case for regionally integrated irrigation development New determined
Improve community understanding of the potential economic benefits of water management and To be Effective w Effective New irrigation and foster a long term investment view determined
Develop and implement opportunities for digital content and capability improvements that CDC & Enable In progress accelerate and leverage ultra-fast broadband uptake (ERP 9)
Establish CDC as a Commercialisation Centre focused on improving and maximising successful CDC In progress commercialisation of innovation in Canterbury as part of the Commercialisation Partner Network (CPN) ) being established by MBIE
3 Establish a better understanding of incremental innovation happening in the region within business CDC New and better support and develop this.
Support incremental technological innovation throughout the region by developing an integrated CDC New eco-system that enables development of innovation in all forms across both Research and Business Communities.
Investigate methods to improve workplace productivity CDC New Improving productivity through innovation through productivity Improving
Page | 9 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 17
2013 Review
and build Implement the Central City Blueprint, starting with land acquisitions for the anchor projects (ERP12) CERA In progress
4 n Successful Successful central city city central desig Develop a new integrated domestic and international terminal at Christchurch International Airport CIAL In progress
Reclaim 10ha of land utilising recycled hard fill from earthquake demolition activities for critical port
improved improved infrastructure at Lyttelton Port of Christchurch supporting the ports rebuild programme and future LPC In progress growth and
networks s 5 Emerging from the six Core Cities research, establish a network to improve the co-ordination of Core LGNZ In progress
xport City China delegations through shared ideas and information. This will help to increase the exposure of New Zealand companies to appropriate markets in China istribution istribution d Undertake a gap analysis on export capability development training and products in Christchurch CDC New with a view to enhancing products and services offered Increased e Increased
Page | 10 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 18
2013 Review
Keeping the City Competitive Actions Lead Agency Status
Implement the Labour Market Earthquake Recovery Programme for greater Christchurch (ERP 3) CERA/MBIE In progress
Create sector workforce plans to articulate the immediate, short and long term workforce needs of the sector and identify what is required to accelerate recovery of the sector and provide the foundation for long term CERA In progress economic growth
Establish an integrated information system including a quarterly snapshot of labour market, an annual rolling CDC In progress labour report and quarterly sector workforce reports and statements
Develop a sophisticated and targeted national/international attraction plan to attract highly skilled and To be New productive people and value adding business (entrepreneurial risk takers) determined
Skills and Employment Hub, a help service for employers to fill job vacancies that support the Canterbury MBIE On-going service rebuild
Canterbury Skill Shortage List, a list which highlights occupations in shortage that are needed during the DOL On-going service rebuild in Canterbury, and facilitates the grant of work visas for those occupations
Workforce Settlement Support Service, a free service available to Canterbury employers and newcomers who need CECC On-going service assistance to find information about settlement issues
Create an offshore recruitment toolbox, a collection of case studies and recruitment tools (regional messaging, images, key contact information), to support any businesses needing to recruit offshore; CDC New particularly focussed on supporting small business Support Canterbury tertiary institutions to recover their position in the tertiary system and help lead the TEC In progress Canterbury recovery (ERP 5)
Provide additional places for construction related trades training for the Canterbury rebuild, and trial new TEC In progress flexible study/work options
Establish support schemes and local funding models that better link students with business and encourage CDC New apprenticeships, workplace training for youth or allow skill upgrades while working
Continually enhance connections between schools, tertiary institutions and workplaces to develop industry- To be New relevant skills within schools, and ensure graduates are earn or learn ready determined Establish a safe haven for 20 technology companies displaced by the Canterbury earthquakes and in doing so EPIC Innovation Completed prototype a new type of entrepreneur community (EPIC Sanctuary) Establish a world-class hub for health education, research and innovation next to the existing Christchurch CDHB In progress Hospital (ERP 20) Establish the southern delivery arm of the National Health Innovation Hub CDHB In progress Establish a rural technology park in Templeton (close to key stakeholders, researchers, customers, suppliers Maugers and facilities) to help start-ups and SME’s overcome the premises challenge often encountered by young and In progress
Construction Ltd smaller companies Set up a collaborative effort between Lincoln University and the Lincoln based Crown Research Institutes to Lincoln In progress focus on Agritech innovation (Lincoln AgriScience Hub) University Complete the development and utilisation of the Food Innovation Network (which includes Food Innovation MBIE/CDC In progress South Island based in Christchurch) Develop Callaghan Innovation to encourage business innovation in high-value manufacturing MBIE In progress Supporting innovation Supporting Establish an innovation precinct to encourage collaboration between innovative business and research MBIE New organisations, improving productivity for Christchurch & New Zealand Work to increase productivity in the construction sector to support the recovery (ERP 17) MBIE New Explore ways to incorporate sensors into the city during the rebuild, creating a more intelligent and Sensing Cities In progress connected city Identify and implement ways to create an environment where risk taking and failure is okay, to increase the To be New risk appetite to a level which encourages innovation determined
Page | 11 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 19
2013 Review
Increase visibility of current innovation initiatives(public and private) happening in the region to improve To be New awareness of support available for good ideas determined Temporarily activate vacant sites within Christchurch with creative projects, to make for a more interesting, Gap Filler In progress dynamic and vibrant city Embed the concept of voluntary contribution into the lives of all young-at-heart New Zealanders VAF In progress Work with Councils to develop planning and consenting processes that are easy to follow and business
CERA New friendly (ERP 19)
Implement an internal customer service project to improve consenting processes and business engagement CCC In progress
do business do Develop a set of guidelines for Business Friendly Cities, based on the Core Cities research, to assist in LGNZ New
Making it easier to to easier it Making benchmarking, sharing and supporting between cities, and improving council services. Rebuild the city's earthquake damaged roads, fresh water, wastewater and storm water networks (horizontal SCIRT, CERA, CCC In progress infrastructure) & NZTA Construct the Christchurch Motorway Projects, State Highway improvements providing critical routes to NZTA In progress central Christchurch, Port of Lyttelton and Christchurch International Airport Prepare a South Island Freight Plan to guide public and private sector planning and investment decisions in NZTA In progress relation to transport and logistics
Connect schools, hospitals and 90% of businesses to ultra-fast broadband by 2015 and the remaining 10% of Enable In progress businesses and all homes in urban Christchurch by 2019 Deliver broadband to rural homes and businesses in Canterbury at prices and levels of service comparable Chorus & In progress with urban areas Vodafone Infrastructure Implement the Greater Christchurch Urban Development Strategy through statutory land use and urban Environment In progress growth management through the completion of Chapter 12a of the statutory Regional Policy Statement Canterbury Environment Prepare a Land Use Recovery Plan to provide certainty about future land use patterns in greater Christchurch In progress Canterbury To be Provide information and raise awareness about infrastructures role in supporting the local economy New determined Reduce the barriers for local manufacturing and construction SMEs wanting to form collaborative agreements to access finance, workforce capacity, resources and scale to compete for large scale projects during the CECC/CDC In progress rebuild, develop best practice for collaborative arrangements (ERP 7)
To be Utilise KiwiNet connections nationally and internationally to grow export opportunities New determined
networks Facilitate the formation of a Digital Leaders Group CDC In progress To be
Connections and business business and Connections Investigate how the new Open Sky Policy for Christchurch International Airport can be utilised by the region New determined
Capital Cluster, increases the level of investment available to targeted high growth potential businesses; assist these businesses in building robust investment cases and connect them with appropriate expertise to CDC On-going service
vehicles prepare business cases Investment Investment Implement the greater Christchurch Visitor Sector Recovery Plan (ERP 15) CCT In progress Develop and implement an international education marketing strategy and support marketing and regional Christchurch In Progress brand development (ERP 16) Educated
Establish the Precision Agriculture Association to identify the critical enabling technologies that influence
CDC In progress profitable land based production outcomes and ensure commercialisation of appropriate technologies
Identify opportunities to increase value from improved production in the rural sector to lift greater MPI New Christchurch GDP and support recovery (ERP 18) Establish sector advisory groups as a platform for sector led planning CDC New Produce a report to understand sector constraints and enablers to improve planning CDC New Sector development Sector Establish The Canterbury Report as a regular stakeholder update on the state of the region’s economy CDC In progress
Establish a business attraction function to help attract and retain businesses in Christchurch CDC New To be Investigate the feasibility of services providing support for start-up businesses New determined
Page | 12 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 20
2013 Review
5. POSSIBLE GROWTH FUTURES FOR CHRISTCHURCH
CEDS describes priorities and projects that provide multiple paths to possible futures for the Christchurch economy. If done well, Christchurch GDP can be 54% higher than it is today. The graph below shows city GDP forecasts. The methodologies for calculating each of these projections is given in the Background Paper.
By ‘Keeping the City Competitive’ Christchurch’s baseline GDP (green line) is projected to grow at 1.9% per annum.
The upper (purple) line is the potential GDP outcome if the city is successful in delivering the ‘Big 5’.
The shaded area is the range of possible outcomes from various degrees of success with economic development projects and the ’Big 5’ over the next 20 years.
The role of CEDS is to ensure that economic development activities, resources and effort support the ‘Big 5’ and maintain city competitiveness, and growth outcomes are maximised.
In a declining economy (red line7) a city struggles to retain baseline competitiveness, losing working age population and key industry.
The accumulated value of the shaded area to Christchurch’s economy is an additional $18bil. The accumulated loss to the Christchurch economy of not completing the rebuild, keeping competitive or doing the ‘Big 5’ between 2012 and 2031 is -$54bil.
7 Modelled by CDC using 10 similar sized US cities modelling an average growth rate of 0.1%
Page | 13 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 21
2013 Review
6. MONITORING
CDC will monitor the performance of CEDS by regularly reviewing and reporting on a core set of indicators. CDC will also benchmark8 Christchurch’s economic performance against other Tier Three Australasian cities9.
Economic progress and indicator reports will enable agencies and the business community to track the performance of projects against goals. This will provide the basis on which to identify areas where intervention and resources are being effective and where new opportunities have surfaced.
The table below describes the categories of indicators that CDC will use when reporting.
Macro-economic Advancement Sectors Quality of Life Environment The macro indicators include This captures the Indicators observing the A set of comparable quality of unemployment, average wage advancement of knowledge performance of key sectors – living indicators for cities such rates, migration and other and technology through the Agrictech, Technology, Value - as environmental, crime, high-level statistics education and innovation eco- Added Manufacturing, facilities, services and systems. Indicators will International Education, commuting times describe qualification Professional Services; and attainment, commitment to other gauges such as retail research and tertiary spending, building consents enrolments, for example and guest nights Refer to CDC website for economic development reports: www.cdc.org.nz
8 Where city economic data is available and comparable 9 Refer to CDC Australasian City Hierarchy Model, Pg11 of the Background Paper www.cdc.org.nz
Page | 14 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 22
2013 Review
7. ADDITIONAL INFORMATION
Summary of Key Findings from the Background Paper and CEDS Workshops Categories The ‘Big 5’ - The five regional initiatives that can step change Christchurch’s GDP. Strategy Keeping the City Competitive - The elements that keep a city competitive and maintain GDP baseline Strategy growth. Australasian Context – CDC’s Australasian City Model10 creates a city hierarchy based on population Strategy size. Within this hierarchy Christchurch is a Tier Three city. Rural Productivity – Growth of the rural economy from the agriculture sector will provide economic Business & benefits for the Christchurch economy. There is also a need to balance quality of life with nitrate and Sectors water management in this growth. Natural population growth will be insufficient to increase the number of working age people over the Labour next 20 years. There are a number of anticipated labour pressure points. 1. As a result of relocations prompted by the Labour earthquakes (2010~2012); 2. Between sectors during the construction boom (2013~2016); 3. Post- rebuild mini recession (2016~2018); 4. Global labour competiveness (2018~). The increasing global demand for skills will make attracting labour to Christchurch increasingly difficult. Labour Christchurch working age population can be boosted by transferring temporary labour from the rebuild Labour in to other permanent forms of employment. Over the next 20 years Christchurch can expect dynamic and changing labour demand in the Labour Construction, Agriculture, Technology and Manufacturing sector. Productivity Challenges - Businesses will not be able to rely on population growth alone to increase Business & output and should not be expecting to rely on hiring more staff to fill new orders. It is likely that Sectors business will need to produce more with a similar number of staff. There is a need to ensure that infrastructure investment, changing land use patterns across greater Business & Christchurch and agricultural sector growth do not adversely affect long-term economic outcomes. Sectors Improve research and development (R&D) outcomes and visibility of the region’s innovation system. Innovation Christchurch will establish a reputation for its innovation systems. Historically, focus in the innovation sector has been on new start-ups and entrepreneurs; however we Innovation know little about the incremental innovation and product improvement process that most businesses implement without recognising it as R&D. Prioritisation - CDC does not have the resources to do everything related to economic development. Co-ordination Role clarity for CDC in the post-earthquake environment is required. & Leadership Christchurch needs to display an increased appetite for risk, both in systems and processes and in Co-ordination attitude. & Leadership There is a continuing need to align education and skills with business needs. Co-ordination & Leadership Christchurch has suitable leadership vehicles and systems in place that will capture and drive the next Innovation wave of ideas and innovative initiatives that become economic game-changers. Ensure the quality of living in Christchurch matches the requirements of the changing population Innovation dynamic e.g. people who are innovative, risk-takers, creative and adventurous. Long-term insurance uncertainty (availability and cost) for the business sector and residents is Business & restricting the ability to invest and make decisions. Sectors We need to continue to identify and support business sectors such as Food and Beverage Processing, Business & ICT and Agritech to grow. Sectors Reconceiving city image perceptions within the region and outside the region is important, and it Co-ordination needs to happen in a co-ordinated way. The four audiences each requiring subtly different approaches are visitors (CCT); people (CCC); investment (CCDU); and business (CDC).
10 Refer pg.11 of the Background Paper for the Christchurch Economic Development Strategy
Page | 15 of 16 ATTACHMENT 1 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 23
2013 Review
8. GLOSSARY OF TERMS
CBD Christchurch Business District
CCC Christchurch City Council
CCDU Christchurch Central Development Unit
CCT Christchurch & Canterbury Tourism
CEDS Christchurch Economic Development Strategy
CERA Canterbury Earthquake Recovery Authority
ECAN Environment Canterbury
ERP Economic Recovery Programme
GDP Gross Domestic Product
ICT Information and Communications Technology
LGNZ Local Government New Zealand
NZTA New Zealand Transport Authority
PEPR Partnership for Economic Prosperity and Recovery
PMO Project Management Office
R&D Research and Development
RONS Roads of National Significance (NZTA key roading projects)
SCIRT Stronger Christchurch Infrastructure Rebuild Team
VAF Volunteer Army Foundation
Page | 16 of 16 ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 24
BACKGROUND PAPER to the CHRISTCHURCH ECONOMIC DEVELOPMENT STRATEGY Prepared by Canterbury Development Corporation / FEBRUARY 2013
Drivers of economic prosperity Sector profiles
% 27 Where we want to be % 25 in 2031
Introduction and key issues The central city 13% Other information
% 7% 8 7%
6% 4%
3%
Importance of cities for economic Earthquakes development and the economy Economic development planning process
Canterbury Development Corporation ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 25 background paper for the christchurch economic development strategy
Table of Contents
1 Introduction 03 1.1 The Background Paper 04 1.2 Key Issues and Opportunities to 2031 04 1.3 Overview of the City 05 2 Importance of Cities for Economic Development 13 3 Drivers of Economic Prosperity 15 3.1 Government Growth Agenda 16 3.2 Capital Markets 16 3.3 Innovation and Entrepreneurship 17 3.4 People 22 3.5 Connectedness 27 3.6 Business Environment 29 3.7 Natural Resources 30 3.8 Institutions and Governance 31 3.9 Earthquakes 33 4 Central City 35 4.1 Pre-earthquake 36 4.2 Drivers of Central City Competitiveness 37 4.3 Central City Plan 38 5 The Christchurch Economic Development Planning Process 39 5.1 Introduction to the Process 40 5.2 Integration with Recovery Planning 40 5.3 Stakeholder Engagement 40 6 Where We Want to Be 41 Background Paper Review Panel Appendix One: Sector Profiles p46 »»Steven Perdia, Canterbury Development Corporation Appendix Two: Market Profile - China p61 »»Amy McNaughton, Appendix Three: Risk Profiles p62 Canterbury Development Corporation Appendix Four: Canterbury Development Economic Models p63 »»Alan Bywater, Christchurch City Council Innovation Cities Analysis p65 Appendix Five: »»Brett Ellison, Appendix Six: Methodology for GDP Projections p66 Ngai Tahu Caroline Saunders, Appendix Seven: Methodology for Population Projections p71 »» Lincoln University Appendix Eight: Glossary p73 Thank you also to the team at CDC Appendix Nine: Bibliography p74 for their comments and contributions. ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 26
dedicated to innovation economic growth quality of life
1/ Introduction
03
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 27 1/
The purpose of the Christchurch Economic Development Strategy is to identify long-term growth goals to 2031 that will create a stronger regional economy. By setting a common course, working with the business community and investing in shared goals we will create synergies and generate better economic outcomes.
The background paper is to be read in conjunction with the new Christchurch Economic Development Strategy (CEDS). The purpose of the background paper is to provide the high-level macro evidence base which, combined with micro-level evidence developed in the extensive business consultation in 2009 and 2010, will lead to credible decisions and assumptions being reflected in CEDS. It will provide explanation, clarification and further information on the Christchurch and Canterbury economies to accompany the business- reported issues that can be found in previous research and the new CEDS.
1.1 The Background Paper 1.2 Key Issues and The background paper is a collection of Opportunities to 2031 available statistics1, data and trends from a The region of greater Christchurch is variety of sources such as Statistics NZ, the currently in an exciting position facing Core Cities project and economic reports redesign and significant investment in which support CEDS. It provides the rebuilding the region at a time when context and background for assumptions economies are expected to emerge from a and decisions within the strategy protracted period of economic instability. describing the key attributes of the greater This presents many opportunities and issues Christchurch economy and the drivers of for the city, which need to be captured and economic growth. addressed in CEDS. The background paper is arranged The key challenges to 2031 are: as follows: »»Understanding the post-rebuild economic »»An introduction, description and brief growth path history »»The ageing population, and retention »»The role of cities in economic and attraction of young people, affecting development workforce and skills »»The drivers of economic prosperity and »»The temporary or permanent relocation of where opportunities exist business activities »»The influence of geographical factors on »»Recovery planning that provides long- economic prosperity such as the central term outcomes rather than constraints city and the relationship between the city and region The current key economic opportunities are: »»Description of the process for developing »»Major irrigation in the Canterbury Plains and reviewing CEDS (Water Management Strategy) »»Outline of the goals of the strategy »»A successful rebuild with an effective »»Description of business sectors central city design attracting workers, businesses and boosting productivity Many of the statistics presented in this report Harnessing innovation to grow GDP are dated prior to the earthquakes. Where »» 04 possible the impacts of the earthquakes »»Improved global distribution networks have been included.
1 Unless otherwise stated statistics are drawn from Statistics New Zealand
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 28
Introduction
1.3 Overview of Christchurch is the second-largest city in Greater Christchurch New Zealand and the largest in the South Island. The estimated population 1.3.1 Definition of City and Region in 2010 was 376,000 and, having Canterbury is the most populous region suffered some loss in population in the South Island with an estimated following the earthquakes, is now population of around 560,000 people. The approximately 368,000. region’s population has grown at around The Christchurch City boundary extends 1.3% per annum for the past decade. to Banks Peninsula, including the The region incorporates ten territorial settlements of Lyttelton and Akaroa. authorities: Increasingly, the districts of Waimakariri »»Kaikoura District and Selwyn – immediately outside of the city – are becoming important to Hurunui District »» the economy of the city, providing both »»Waimakariri District labour and production which feeds »»Christchurch City in to Christchurch City. It is difficult to »»Selwyn District consider Christchurch City in isolation when creating an economic development »»Ashburton District plan. For example, greater Christchurch is »»Timaru District appropriate when discussing the workforce »»Mackenzie District including the Selwyn and Waimakariri »»Waimate District District Councils, and Canterbury is appropriate for agricultural considerations. »»Waitaki District It is likely that macro-economic planning will have a combination of boundaries.2
05
2 Throughout this report statistics on Christchurch, greater Christchurch and Canterbury are used depending on the availability of statistics and the logical boundary given the nature of the discussion.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 29 1/
1.3.2 History 1.3.3 City Geographic Structure Evidence suggests Christchurch was first Background to City’s Economic settled by Mãori as Õtautahi in around Activity Patterns 1250. European settlers first established Christchurch City is located at the eastern themselves in the city around 1840, with edge of the Canterbury Plains. The city significant arrivals in 1850 from four ships includes Banks Peninsula, including carrying around 800 settlers. The city Lyttelton and Akaroa township. The formally became a city by Royal Charter on satellite towns within Waimakariri and 31 July 1856, making it the oldest city in Selwyn Districts are increasingly becoming New Zealand. important as a source of workers. The towns The region’s activity has traditionally been that are within easy commuting distance driven by agriculture thanks to a large from Christchurch City are experiencing high area of arable land, the Canterbury Plains. levels of growth. Significant future investments in water Prior to the earthquakes a significant amount distribution and storage projects are likely to of business activity occurred within the increase the dominance of agriculture in the central city area. region’s economy. In addition there are numerous major The agricultural hinterland of Christchurch business parks or industrial hubs. as a foundation of its economy and export base evolved central city based Business Many ICT and electronics companies are Services and Manufacturing sectors, located close to the airport on the edge especially Food Processing, and the of Burnside in Sir William Pickering Drive distribution of goods through two major and Sheffield Crescent. Following the ports (Lyttelton Port and later Christchurch earthquakes these businesses have been International Airport). joined by business services companies. More recently Information and Various factories are located in the Communications Technology and High Value industrial zone in the east of the city, Added Manufacturing have developed and around Bromley and Woolston. Large Business & Financial Services has advanced numbers of these factories have as a growing and high value sector. The city experienced significant land and building and region also operates as a base for the damage and future relocation is a risk. South Island Tourism industry. Other major business parks include Christchurch has recently suffered from Hazeldean and Show Place in Addington, a series of earthquakes. A magnitude 7.1 Izone in Rolleston, small and medium occurred near the city on 4 September enterprise manufacturing, office and retail 2010 and caused significant damage but to the south of the central city (between no fatalities. This earthquake was followed Moorhouse and Brougham streets). There by a series of aftershocks, including a is significant industrial activity from Hornby magnitude 6.3 on 22 February 2011 which through to Addington along the rail corridor caused massive damage in the central city and in the Halswell Junction Road Area; and some suburban areas and the death of North Belfast; Retail and service industries 185 people. The earthquakes have resulted throughout the city, but clustered around 3 in a decrease in population, movement of key activity centres and along arterial businesses out of the restricted red zone, routes (such as Papanui, Riccarton, Hornby, redistribution of consumer spending, Blenheim Road, Ferry Road). Distribution infrastructure damage and on-going activity is clustered around the seaport and significant insurance issues. Most of the there is a new development at Christchurch central city area became unuasable, forcing International Airport. businesses to relocate to temporary or new permanent locations.
06
3 See the Urban Development Strategy
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 30
Introduction
City and Greater City Employer Approximate Staff Numbers (FTE) Employment Anchors There are a number of major employment Canterbury District Health Board 8,000 anchors in the city/region. These anchors Fulton Hogan Ltd 5,500* are characterised by being unlikely to leave the greater Christchurch area, and are large Christchurch International Airport Approx 5,000 employers. These institutions span both (Many Different Employers) public and private sector companies. Anzco Foods Limited / Canterbury Meat 2,500* Packers Ltd Within the Canterbury region there are estimated to be 174,300 full time equivalent Christchurch City Council 2,220 staff (FTEs). These main, major employment CPIT 760 anchors in the city/region have an estimated combined FTE of more than 28,000 staff, Foodstuffs South Island Limited 1,200* around 16% of total FTEs for Canterbury. Nurse Maude Association 1,400* These companies will remain as employment Ritchies Transport Holdings 1,100* anchors as the city grows and develops. Ryman Healthcare Limited 2,600* City-Region Relationship University of Canterbury 1,900 Christchurch is the largest city in the South Island. It sits on the edge of a vast Public Order and Safety 3,100 agricultural plain and has an international »» Police airport and deep – water sea port. The city »» Fire Department is the main distribution hub of the South »» Correctional and Detention Island, and has traditionally had a key role AMI Insurance Limited 800* in supporting the agricultural hinterland. The relationship between the city and the Christchurch Casinos Ltd 550 region is complex and difficult to quantify. City Care Ltd 900* Christchurch supports the farming sector through business services and machinery Lincoln University 620 and equipment manufacturing and then Ravensdown 680* downstream through food processing, PGG Wrightson 450* distribution and exports. The city also acts as a gateway to the rest of the South Island for Tait Electronics Ltd 740* tourism, with its international airport. The city Government Departments such as 2,280 provides around 70% of the region’s GDP. »» MoE Ng i Tahu »» MBIE »» IRD Ng i Tahu is the largest iwi in Christchurch »» DSW and Canterbury. The governing body of the iwi, Te R nanga o Ng i Tahu, manages the *not all employees are based in Christchurch Source: Kompass, Statistics New Zealand collective assets of Ng i Tahu whānui on behalf of the iwi. They also seek to support the interests and aspirations of the iwi. The agreement of a Settlement on grievances following the Treaty of Waitangi has enabled the tribe to become a significant economic player in the South Island. Ng i Tahu Holdings Corporation Limited manages a group of four subsidiary companies: Ng i Tahu Capital, Ng i Tahu Property, Ng i Tahu Seafood and Ng i Tahu Tourism. Ng i Tahu Property is particularly significant in Christchurch with big box retail, public buildings and office developments 07 (www.ngaitahuholdings.co.nz).
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 31 1/
1.3.3 City Geographic Structure [cont.] formed in the west of the city, towards further spreading the economic heat. Post-Earthquake Movements the airport and around Templeton and The Canterbury Earthquake (Resource Prebbleton. Blue ‘cold spots’ are most Management Act Permitted Activities) 4 Evidence gathered shows that following notable in the city centre and towards Order 2011 (SR 2011/36) allows for the earthquakes there has been a the Port Hills and in the eastern part of businesses to be relocated to temporary decline in economic activity as the CBD the city. This analysis draws on indicator accommodation for a period of five years has dispersed and other businesses data such as cellphone usage, postal from February 2011 without adhering and residents have migrated towards addresses, school enrolments and to the provisions of the Resource the western side. The eastern side has observed changes in business activity and Management Act. As a result workplaces experienced significant damage to land traffic increases and decreases. and staff have been able to become more and properties. The figure below shows flexible around working locations and In addition, some small businesses are economic activity changes following the arrangements on a temporary basis. earthquakes. The red ‘hot spots’ have operating out of residential dwellings
08
4 CDC Economic Hot/Cold Spots Analysis
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 32
Introduction
1.3.4 Sectors that economies of a similar size will have Some sectors in an economy can be viewed similar sectors of comparable size with any as drivers of growth such as agriculture, The Christchurch economy has, for the distinctive difference relating to geography and others viewed as enablers or support purposes of this paper, 12 key sectors. and/or access to natural resources. sectors largely shaped by the size of driver Some of them are split in to sub-sectors Christchurch is no exception with an sectors (for example, growing agriculture (Agriculture, Mining, ICT, Manufacturing, industrial make-up similar to the rest of New will grow the number of accountants Logistics, Business and Financial Services, Zealand, with the exception of agriculture, and lawyers needed, but not vice versa). Tourism, Retail, Government, Health, forestry and mining. Many of these sector can also partly drive Construction and Education). It is likely their own growth - such as Business and Financial Services and Education exporting overseas. Both sector types are important Economic Drivers Enabler Sectors for economic growth. Investment in to sectors can help drive total Agriculture Logistics growth and should either grow a sector that Mining Business & Financial Services pulls other sectors along, correct a market failure or provide a platform for efficiency ICT Retail and improved productivity in a sector. Manufacturing Government Investment in both types of sectors can be necessary to ensure an economy can Tourism Health operate efficiently. Construction In 2009 and 2010 the CEDS process used extensive research to analyse and identify Education the key business sectors in the city.5 This process looked at the size of the sector, its A summary of the key sector rationale is described below: contribution to exports, its flow-on benefit, the city and country’s competitive advantage, High Value-Added Manufacturing: Business and Finance Services: potential for market growth, estimated »»Large commodity exporter as well as »»High potential for market growth productivity and the qualifications of people significant high-value businesses such »»High productivity for each worker employed in each sector. The key sectors as seed production »»Significant contributor to GDP identified for Christchurch included High »»Strong competitive advantage for city Value-Added Manufacturing, Agribusiness, »»Highly productive Health, Community Services ICT, Business and Financial Services, Health »»Strong specialisation for the city and Education: and Education. »»High potential for growth (private In the initial CEDS research, Agriculture Agribusiness: sector provision not public sector) was not identified as a significant sector »»Large commodity exporter as well as »»Strong flow-on effects to other sectors within Christchurch City but many industries significant high-value businesses such »»Highly-qualified workers within the city benefit from and complement as seed production »»Research and Development and the sector; for example food and beverage »»High competitive advantage for commercialisation growth processing, high-valued manufacturing Christchurch and New Zealand business services and distribution. The importance of the relationship between the Information and Communications rural hinterlands and the city is a key change Technology: in the scope of CEDS to view economies »»High potential for market growth rather than boundaries. In particular, some »»High productivity for each worker further research is underway to understand the economic benefits of the irrigation of »»Strong competitive advantage for rural land both directly and through indirect Christchurch (output per employees multiplier effects. compared to New Zealand on average) More information on the key sectors for greater Christchurch, and their priorities for growth, are presented in Appendix One of this document (pg 46). 09
5 Canterbury Economic Development Corporation Sector Selection model, developed with AERU at Lincoln University.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 33 1/
1.3.5 Recent Performance Christchurch had a good economy before Gross Domestic Product (annual average percent change) Source: Statistics New Zealand, the recession (2008) and earthquakes Infometrics, CDC (2010, 2011), comparable with other 4.0% New Zealand cities. The city and region Canterbury New Zealand entered in to the recession a little later 2.0% than the rest of New Zealand, boosted by strong commodity prices. The impact of 0.0% the recession, including the resulting lower
commodity prices, is still continuing in some -2.0% sectors despite earlier signs of recovery occurring in New Zealand. -4.0% The September 2010 earthquake and Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Mar 08 Mar 09 Mar 10 Mar 11 series of aftershocks had an immediate -6.0% impact on the city and region’s economic output. Infometrics Ltd estimates that Canterbury’s output in the 2011 year was down 3.4% from the year ended Employment December 2010. As construction Source: Statistics New Zealand, (annual percent change) Infometrics, CDC begins and businesses return to normal 20.0% operating conditions, it is expected that 15.0% Christchurch these GDP estimates will pick up strongly. Canterbury It is important to acknowledge actual 10.0% New Zealand growth, however, not the superficial and temporary impact of the rebuild. As 5.0% rebuild activity peaks and declines it is 0.0% important to ensure that the underlying production in Christchurch and -5.0% Canterbury continues and grows. -10.0% Complementing GDP, employment growth was strong in Christchurch and Canterbury -15.0% over the previous decade until the recession Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 and earthquakes hit. The Household Labour Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Force Survey (Statistics NZ) estimates that the average employment level (the total number of the workforce in employment) over 2011 was 10.6% below the average Unemployment Rate Source: Statistics New Zealand, level in 2010 for Christchurch. (percent of labour force unemployed) Infometrics, CDC The unemployment rate in Christchurch 9.0% and Canterbury has historically been 8.0% comparably low. On average for the last decade, the Canterbury unemployment 7.0% rate has been 0.8 percentage points 6.0% below the national rate, and Christchurch 5.0% City has been 0.2 percentage points below. During the recession the 4.0% unemployment rate in Christchurch 3.0% increased to 7.0% (September 2009 Christchurch 2.0% quarter) and 5.9% for Canterbury. The Canterbury earthquakes saw unemployment peaking 1.0% New Zealand at 8.1% in Christchurch City (March 0.0% 2011). That rate has now dropped to Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 6.4% and is expected to fall further over Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 10 the next 12 to 24 months.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 34
Introduction
1.3.6 Our Place in the Australasian This has implications for the structure Economy of city economies and the skills and Christchurch City is the second-largest city knowledge base. For example, will in New Zealand, but much smaller when ambitious people move to larger cities? Do viewed from an Australasian perspective. entrepreneurs and new companies want New Zealand and Christchurch are part to be closer to big markets? Are satellite of the Australasian economy and that link branches only based in smaller cities than will strengthen as technology, scale and where the head office is based? the increasing mobility of people sees the Cities of a similar size will have similar integration of the economies transcend economic characteristics. Benchmarking historical boundary lines. The visible impacts Christchurch’s performance against similar of this today are a labour and skills flight sized Australasian cities will provide a from New Zealand to Australia, particularly good basis for comparable analysis in in to Australia’s mining industry, and the exploring opportunities for improvement reliance on Australia as a key export partner. and development. An obvious implication A representation of the Australasian city is workforce as third-tier cities will have hierarchy6 using population as a base is to work harder to attract and retain their given in the diagram below. In this model labour force than higher-tier cities. For Christchurch is presented as a tier-three city example, an implication for workforce (population between 200,000 and 1 million). planning is the need to create a value This model represents a network-based proposition for residents and migrants hierarchy in which the dominant cities at the that attracts from lower tiers and protects top of the hierarchy are those which serve as against higher-tier offerings. ‘basing points’ for resources flowing through intercity networks7.
Australasian City Population Hierarchy
Tier One Sydney Melbourne Pop: 4,391,674 Pop: 3,999,982
Auckland Tier Two Brisbane Perth (region) Adelaide Pop: 2,065,996 Pop: 1,728,863 Pop: 1,225,235 Pop: 1,507,760 Capital Cities
Greater Gold Coast Newcastle Wellington Christchurch (region) Pop: 557,822 Pop: 398,769 Tier Three Pop: 446,310 Pop: 490,100
Sunshine Coast Wollongong Greater Hobart Canberra Pop: 270,772 Pop: 268,944 Pop: 211,656 Pop: 391,645
Hamilton Geelong Townsville Cairns (urban zone) Pop: 173,450 Pop: 162,291 Pop: 133,911 Tier Four Pop: 176,900
Dunedin Darwin Tauranga Toowoomba Pop: 126,900 Pop: 120,588 Pop: 116,000 Pop: 105,984 11
6 CDC model 7 Friedmann, 1986
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 35
1/ Introduction
Characteristics of Tier One - Tier Three Cities
Population Unemployment Average weekly Population* % national Density Rate (personal) income City 2010 2010 (persons/km2) (2010, June qtr) (2009)9
1 Sydney 4,391,674 20.42% 377 5.6 $1,471 (AUS)
1 Melbourne 3,999,982 18.60% 454 5.4 $1,324 (AUS)
2 Brisbane 2,065,996 9.61% 343.4 5.2 $1,325 (AUS)
2 Perth 1,728,863 8.04% 314.9 4.9 $1,510 (AUS)
2 Auckland (region) 1,507,760 34.01% 265.4 8.7 $913 (NZD)
2 Adelaide 1,225,235 5.70% 658.6 5.5 $1,264 (AUS)
3 Gold Coast 557,822 2.59% 395.7 6.1 $1,124 (AUS)
3 Wellington Region 490,100 11.06% 60.2 5.5 $1,042 (NZD)
3 Greater Christchurch 446,310 10.07% 44.18 4.89 $842 (NZD)
3 Newcastle 398,769 1.85% 134.9 5.2 $1244 (AUS)
3 Canberra 391,645 1.82% 443.5 3.5 $1,510 (AUS)
3 Sunshine Coast 270,772 1.26% 105.9 6.5 $1,035 (AUS)
3 Wollongong 268,944 1.25% 268.3 7.3 $1224 (AUS)
3 Greater Hobart 211,656 0.98% 158.2 4.8 $1,194 (AUS)
AUSTRALIA 21,507,717 2.9 5.5 $1,267 (AUS)
NEW ZEALAND 4,433,000 15.7 6.7 $868 (NZD)
*Population – Australia 2011 Census, Statistics New Zealand 2012 Source: Statistics New Zealand, Australian Bureau of Statistics
Christchurch sits alongside the Gold Coast, Canterbury sits at 97% (boosted by the KEY THOUGHTS FOR THE CITY Newcastle, Wollongong, the Sunshine Coast, agricultural hinterland). Christchurch City and greater Hobart in the tier-three city performs well against these cities in terms Economic Growth category with a population between 200,000 of unemployment. The unemployment rate »»Labour attraction strategies that target and 1 million. Wellington and Canberra in June 2010 was lower than each of the smaller cities than Christchurch may have similar populations but capital cities other tier-three (non-capital) cities, with the be more effective than larger cities have significantly different economic exception of Greater Hobart. »» Business attraction strategies could structures (a specific monopoly which drives Acknowledging Australasian cities as consider Christchurch as a market employment, high wages and resulting competitors for skills and investment widens entry point for large business or as an higher standard of living) and drivers. the scope of competitor and complementor opportunity to move to a larger market Greater Christchurch has a much lower analysis for Christchurch. For example, for small regional businesses quality of life is an important consideration average income than these Australian cities, »»Where would businesses move to if for migrants and is comparable to Australian especially considering the higher value of they left the region? the Australian dollar. However, on average cities such as the Gold and Sunshine Coasts the five Australian cities sit at around 92% with their lifestyle offerings. »»Encouraging young people through a of the Australian average income, and culturally attractive and vibrant city 12 centre
8 Wage and salary income or own unincorporated business income, annual divided by 52 (Australia); and Total usual weekly earnings from self-employment and wage and salary jobs (or earnings from paid employment), divided by the number people receiving earnings from a self-employment or wage and salary job (or number of people in paid employment) (New Zealand) 9 This figure is for greater Christchurch. Christchurch has a population density of 228.4.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 36
dedicated to innovation economic growth quality of life
2/ Importance of Cities for Economic Development
13
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 37
Importance of Cities for 2/ Economic Development
Cities play an important role in economic development. Cities provide economies of scale and reduced transaction costs through people and businesses being in close proximity.
Cities act as a hub, collecting skilled people New Zealand Cities practice initiatives and identify comparative and other resources to promote learning, Traditionally, cities have developed near advantage opportunities. innovation and ease of knowledge sharing. key resources and trade routes. Instead of Each of the core cities has evolved as a The scale of cities makes investment in pure organic growth, Christchurch was a hub for regional primary production and infrastructure more efficient, allowing more designed city. The Canterbury Association export. More recently, Tauranga’s rapid growth to occur. As cities grow and reach was formed in 1848. Access to the city was growth and relative importance to New a critical mass they can become more planned from Lyttelton Port, creating a route Zealand’s economy may be attributed to resilient and attractive for residents and for trade for agricultural products produced its sea port. Key similarities between the businesses, fuelling further growth. in the Canterbury plains. The city remains Core Cities included the drive to create a Internationally, cities are shown to be a key transportation hub. It is a gateway for smart and innovative brand, issues with the more productive, especially large cities. visitors to the South Island and imports and ageing population scenario and the level Tokyo has around 28% of the Japanese exports through its two ports (Christchurch of qualifications (excluding Auckland and population, but 40% of the country’s GDP. International Airport and Lyttelton Port). Wellington). The key differences between the core cities participants included access Paris has 16% of the French population, In New Zealand, an estimated 72% of the to different infrastructure assets, some areas but 30% of the country’s GDP. More population live in main urban areas (2011, of niche specialisation (capital, head offices, metropolitan areas have a higher GDP per Statistics New Zealand estimate), with a 10 agricultural servicing, creative and film) and capita than their national average . While further 14% living in satellite or independent population and population density. this may be partly due to the industrial urban areas. In Canterbury, 68% live in main profile of a city, the agglomeration impacts urban areas, with a further 16% in satellite of a wider labour pool, closer geographic or independent urban areas, reflecting a proximity allowing ideas and goods to move stronger rural agriculture sector in relation to around easily, and access to infrastructure, urbanisation in the region. These proportions allow cities to prosper. highlight the scale of cities in New Zealand. “While economic size and growth The Core Cities Project was developed in are important and necessary, several 2011 with Local Government New Zealand, other factors determine a city’s overall the Ministry of Economic Development and competitiveness, including its business the Councils from the six major cities in HOT SPOTS and regulatory environment, the quality of New Zealand. The purpose was to develop Benchmarking Global human capital and quality of life. These a framework to compare competitiveness City Competitiveness factors not only help a city sustain a high factors in each of the six cities: Auckland, economic growth rate, but also create Tauranga, Hamilton, Wellington, Economist Intelligence Unit 2012 a stable and harmonious business and Christchurch and Dunedin. The framework “While economic size and growth 11 social environment.” could then be used to find strengths and are important and necessary, several weaknesses in each city; help assess how other factors determine a city’s overall the New Zealand cities contribute to national competitiveness, including its business growth; and identify potential opportunities and regulatory environment, the quality for collaboration. The Core Cities project is of human capital and quality of life. 14 continuing and Christchurch is working with These factors not only help a city sustain other cities in New Zealand to identify best- a high economic growth rate, but also create a stable and harmonious business and social environment.”
10 Christchurch City Unemployment 11 “Megacity Challenges – A Stakeholder Perspective”, Siemens AG: Germany, 2007
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 38
dedicated to innovation economic growth quality of life
3/ Drivers of Economic Prosperity
15
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 39 3/
Key drivers of economic prosperity in a city include capital markets; innovation; people; connectedness; a good business environment support by suitable infrastructure; natural resources; and institutions and governance.
3.1 Government 3.2 Capital Markets There is uncertainty around whether the Growth Agenda Before the earthquakes, capital was issue for businesses is a lack of capital in general, or a lack of the skills required The Business Growth Agenda sets out identified by businesses as one of their to access capital successfully, such the Government’s plans to build a more biggest constraints to growth. In the 12 as writing business plans and funding competitive and productive economy that Business Survey undertaken in 2009 for applications. Anecdotally it would seem that ensures New Zealand businesses remain CEDS, businesses reported that access to many businesses had difficulty preparing competitive in the world economy. It is capital was their second most significant investment cases and that when a business aimed at creating an environment that allows constraint (following the recession/lack of has real growth opportunities capital will businesses to grow, export and create high- customers) with half of companies believing flow. Many businesses who claim to require value jobs. The six agenda inputs that are that their growth is inhibited by their access capital to grow have other underlying necessary to encourage business growth are: to cash or capital. business issues and the need for capital is a »»Capital Markets The findings include: symptom. A business needs to understand »»Innovation and ideas »»A need for working capital where it is in its development cycle and what type of capital is appropriate at that stage. »»Skilled and safe workplaces »»The need for an agency/panel between businesses and funders to help reduce »»Natural resources In the current economic climate businesses management time spent administering are more reliant on mainstream banks to »»Infrastructure (including electricity, funding issues raise capital. With the loss of second tier broadband, transport) »»45% of respondents indicated that they are funders and equity drying up, it has made it »»Export Markets unable to take advantage of opportunities more difficult for leveraged or fast-growing Various government departments have as a result of lack of funding businesses to raise capital. responsibilities for developing and »»A majority (56%) of respondents In the post-earthquake environment much implementing policy in these areas. indicated if access to capital was of the considerations around capital will be More information can be found at http:// available it would enable business related to funding the rebuild. Earthquake- www.mbie.govt.nz/what-we-do/business- expansion (increased funding was affected businesses have been raising growth-agenda required for businesses to meet their funds to cover insurance shortfalls and long-term objectives) timing differences. »»59% of one-on-one interviewees saw a need for assistance in raising working KEY THOUGHTS FOR THE CITY capital, export finance and overdrafts Capital Markets »»Ensuring businesses can assess what type of capital is required and access it when genuinely required »»Ensuring that the recovery is not significantly delayed by capital 16 constraints »»Availability of new capital for the rebuild and business growth
12 Business Survey undertaken through Research First with telephone surveys of 256 key sector businesses, 319 other businesses and 96 surveys conducted by CDC.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 40
Drivers of Economic Prosperity
3.3 Innovation Product Innovation: A fifth area of innovation that is not The introduction of a new good or service captured in the OECD/Eurostat definition 3.3.1 The Role of Innovation in relates to social innovation. Whilst not Economies or a significantly improved good or service with respect to its capabilities. The product directly related to commercial enterprise, In modern economies, innovation and innovation could either be new to the market creativity and innovation in areas such technological change has a central role or new to the business. as the arts, social structures, public as a driver of growth. This is especially facilities and open space, communication Example: Sony’s four generations and important in advanced economies where mechanisms, sport and recreation all help 150 variations of the Walkman. innovation plays a key role in improving to create an environment conducive to the quality of outputs, production Process Innovation: turning good ideas into new realities. As a processes and goods and services. The introduction of a new or significantly result of the earthquakes there has been a The successful development and improved production process, distribution surge in community led social innovation commercialisation of innovative ideas method, or support activity for goods and in Christchurch such as Gap Filler, the is of key importance in maintaining services. The process innovation could either Student Volunteer Army and the Ministry competitiveness, improving productivity be new to the market or new to the firm. of Awesome. and building new businesses and export Example: Ford’s first use of the moving Innovation adds value through change. opportunities. assembly line to bring the product to the Innovation can be thought of in terms of In general, businesses are driven to person during fabrication, significantly change as either radical or incremental. innovate by market conditions and reducing the number of hours to complete Radical innovation is the creation of competition; through the enhancement one Model T. something new. It is disruptive and of existing products and services; and unpredictable; for example the transition Organisational Innovation: the development of new products and from horse-drawn transport to the internal new production techniques. The implementation of new or significant combustion engine. Incremental innovation changes in business structure or is an improvement to something which Innovation is a driver of growth, but management methods that are intended to already exists; for example improving the not the only driver. It is accompanied improve business’ use of knowledge, the fuel efficiency of an engine. by other drivers such as having an quality of firms’ goods and services or the adequately skilled workforce and the Radical or disruptive innovation often efficiency of work flows. ease of access to capital. takes centre stage; by its very nature it Example: The maximum plant size of 150 is more noticeable in the market place 3.3.2 Types of Innovation people, single job title (Associate) and use of and captures the imagination. Radical The OECD/Eurostat (2005) defines sponsors and mentors rather than managers innovation has high growth potential; innovation as follows: at Gore associates, a privately held multi- however it is also characterised by high million-dollar high tech firm with thousands failure rates and long routes to market. “An innovation is the implementation of a of employees based in Delaware, USA. Despite the visibility of radical innovation, new or significantly improved product (good Marketing Innovation: most growth is achieved through a steady or service), or process, a new marketing stream of incremental innovation that is The implementation of a new marketing method, or a new organizational method in more frequent and economically predictable. concept or strategy that differs significantly business practices, workplace organization Small improvements can add up to from the firm’s existing marketing methods 17 or external relations.” significant change over time, and represents and which has not been used before. The above definition identifies four types of continuous learning by researchers, innovation. Example: Using social media as a managers, developers, suppliers and marketing tool where people market the customers. Incremental change is a key product to their own friends. source of low-risk growth.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 41 3/
3.3.4 The Regional Innovation System market and that most growth is achieved through a steady stream of incremental 3.3.3 Innovation in Christchurch Christchurch has good foundations for innovation. Innovation and the earthquakes innovation with strong tertiary institutions, several Crown Research Institutes, Companies that carry out incremental The Canterbury earthquakes have created commercialisation agents, innovation hubs innovation may not even consider an unprecedented atmosphere of change, and innovative local businesses, with a themselves as innovative, rather collaboration and learning in Christchurch, strong representation of firms involved in undertaking continuous improvements to and an atmosphere conducive to innovation. the High Value-Added Manufacturing, ICT, stay competitive. These companies add For those people involved- be it researchers, Agri-tech and Health sectors. There is also important breadth to our region’s innovation engineers, managers, government, a range of commercialisation support in the ecosystem by providing substantial low-risk developers, suppliers or customers- the form of angel and private equity investor growth for the region’s economy. Despite disruptions to normal operating conditions networks, marketing, legal, accounting and their substantial collective contribution these and consequential city rebuild have professional services firms. companies in the market place in terms of amplified and sped up the continuous innovation and their role in the innovation The highly visible players in the region’s learning process. This learning that can ecosystem is not well understood. be applied as incremental improvements innovation system are those organisations or more radical changes. The public and or entities with a strong focus on research Some of the region’s highly innovative private sector investment into the rebuild and development and which are typified by companies also have a relatively low provides a unique chance to apply collective radical innovations; predominantly public innovation profile due to the nature of their learning and develop new innovative ideas. research organisations (PROs), innovation company and their products, which are less clusters and companies with a strong likely to capture the imagination of people The immediate needs of the rebuild will see research and development focus. It is worth outside their sphere of business. these innovations applied in Christchurch reiterating that radical innovation, with its A brief stocktake of the Greater but there is also the opportunity to capitalise high growth potential, is also characterised Christchurch innovation assets is shown in on innovations born out of the rebuild by by high failure rates and long routes to offering them further afield, both nationally the diagram below. and internationally. These include building repair, construction methods, power management and exploring ways to Canterbury Regional Innovation Systems Assets incorporate sensors into the city, creating a more intelligent and connected city. High Tech ICT Innovation In the Business Growth Agenda Progress Manufacturing
Report on Innovation the Government has Tech NZ recognised the role of innovation in the Funding Taits Callaghan Innovation recovery of Christchurch. Tech Centre Innovation CDHB Precinct Health University “Innovation and research are vital Precinct of Otago IRL contributors to the Christchurch recovery. Canterbury EPIC Science is literally underpinning the rebuild, Scientific with around 150 scientists and engineers Health Innovation CPIT attached to the Natural Hazards Research PVL AgriTech NIWA Platform providing research and knowledge Inn Centre NZIB related to the Canterbury earthquakes. University Lincoln of Canterbury Information about seismicity and liquefaction Agritech Ltd Scion is being used to understand economic NZFISI ESR impacts and develop engineering solutions. Christchurch has a strong base of high value Lincoln Land manufacturing and services businesses, University Care Start Ups plus a key role in servicing the primary Plant Ag & Food sector across the Canterbury region. These Research Business R&D industries are the base for the economic Agriculture & Product rebuild of the city…” Natural Resource Improvements Cluster 18
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 42
Drivers of Economic Prosperity
Current Regional Innovation-Related 9. A collaborative effort between Lincoln Initiatives University and the Lincoln based Crown There are several public sector Research Institutes is being set up to associated innovation-related initiatives focus on Agritech innovation (Lincoln on the horizon. AgriScience Hub) 10. Vacant sites within Christchurch 1. Christchurch is one of the national are being temporarily activated with Health Innovation Hub locations in New creative projects, to make for a more Zealand whose purpose is to support interesting, dynamic and vibrant city the development and commercialisation (Gap Filler) of medical-related R&D. 11. The Volunteer Army Foundation is 2. New Zealand Food Innovation South working to embed the concept of Island Ltd (NZFISI) is part of a national voluntary contribution into the lives of network of science and technology all young-at-heart New Zealanders resources. NZFISI is focused on product development, business development Private sector associated innovation-related and making linkages to the New initiatives on the horizon include: Zealand-wide food innovation network. 1. Enterprise Precinct and Innovation 3. The Christchurch DHB Health Precinct Campus (EPIC) is an innovation campus, (part of the Central City Plan) is a structured to stimulate collaboration and physical campus that is intended growth for innovation-focused companies. to cluster health research facilities, 2. A rural technology park in Templeton commercialisation functions, Health (close to key stakeholders, researchers, ICT entities and specialist tertiary health customers, suppliers and facilities) is services. being established to help start-ups and 4. CRIS Ltd funded by MBIE will carry SME’s overcome the premises challenge out a set of initiatives to improve the often encountered by young and smaller flow of concepts in to development companies and in particular lift the rate of 3. Intentions by Tait Ltd to build a business commercialisation in the region. This is and technology campus. a business-focused initiative. There are also innovation funding 5. Ultra-fast broadband (UFB) roll-out, programmes currently available. being managed by Enable Networks Ltd, is being supported by a new project 1. The University of Canterbury and to maximise business uptake and Lincoln University are partners in the utilisation of the UFB service. Technology Transfer Voucher programme which matches business funding with 6. The Central City Plan for Christchurch government funding to undertake has a significant commitment to businesses research and development innovation and knowledge-intensive projects industry clustering as part of its frame. The frame includes the Health Precinct, 2. The TechNZ Regional Partner Campus style development zone and Programme administered by CECC the Innovation Precinct. provides access to funding and support focused on helping businesses to grow 7. The development of Callaghan Innovation operations in Christchurch 3. Powerhouse Ventures Ltd has a fund whose purpose is to support firms in that invests capital in regional start-up the manufacturing and services sector ventures, funding for start-ups can also to improve competitiveness and growth be provided at a national level by the New through science and technology-based Zealand Venture Investment Fund (NZVIF innovation and its commercialisation. 8. As part of the IBM Smarter Cities Challenge IBM will be engaging stakeholders citywide to recommend a framework that supports economic 19 growth through the integration of innovation, talent and intellectual property resulting from the earthquake rebuild.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 43 3/
3.3.4 Measures of Innovation Patents KEY THOUGHTS FOR THE CITY Innovation is inherently difficult to A patent is a monopoly right that Innovation measure. The following measures gives the exclusive use of an invention provide an indication of innovation for a set period. Lodging a patent »»Improving the success rate of performance in Christchurch. is a signal of innovation, creativity commercialising our high number of patents and the potential for generating City Innovation Rankings »»Increasing the connectedness of the economic activity (although this is not regional innovation assets The Innovation Cities Global Index, guaranteed). The OECD Metropolitan 2011, produced by 2thinknow provides Regions Dataset includes information »»Encouraging demand-driven innovation a comparison of cities from around the on the number of patent applications »»Raising the profile of incremental world based on innovation. 2thinknow, per million inhabitants. In New Zealand, innovation happening within existing takes a broad view of innovation by the Canterbury region has the highest businesses considering cultural assets, human level of patent applicants, at 112. This infrastructure and networked markets. has grown by 77% since 2000 and »»Maximising the potential of innovation The index compares 331 cities, providing reflects both a strong innovation culture clustering projects in the central city classifications for all cities and global and a higher level of commitment to »»Better understanding of the low-risk growth protecting commercial propositions rankings for the top 125 cities. profile of incremental innovation through patents. The table below considers the Innovation Cities Global Index in terms of the cities PCT Patent applications presented in the Australasian city population per million inhabitants (2007) Source: OECD Metropolitan regions dataset hierarchy (see Section 1.3.6) and provides 120 the top four cities for comparison. 100 The Australasian cities in tier three of the population hierarchy (including 80 Christchurch) scored similarly, with all but 60 the Gold Coast achieving a band score of 19 and classification of “4 Influencer”. 40 The Gold Cost was slightly ahead with a 20 band score of 20 and classification of “3 0 Node”. More information on the segments New Auckland Bay Of Plenty Taranaki Wellington West Coast Otago considered by 2thinknow when producing Zealand Region Region Region Region Region Region Northland Waikato Hawke’s Bay Manawatu- Trasman- Canterbury Southland this index is provided in Appendix 5. Region Region Region Wanganui Nelson- Region Region Region Marlborough Cities Global Index (Cities presented in the Australian city population hierachy)
Global Band Cultural Human Networked Score Change Australasian City City Class Rank Score Assets Infrastructure Markets From 2010 Population Hierarchy
Boston 1 Nexus 1 29 9 10 10 0 San Francisco Bay Area 1 Nexus 2 29 9 10 10 +2 Paris 1 Nexus 3 29 10 9 10 0 New York 1 Nexus 4 29 10 9 10 +1 Melbourne 1 Nexus 17 26 9 9 8 +1 Tier-one Sydney 1 Nexus 20 25 8 8 9 +1 Tier-one Wellington 2 Hub 61 23 8 9 6 -1 Capital Auckland 2 Hub 70 23 8 8 7 -1 Tier-two Adelaide 3 Node 112 22 7 8 7 +1 Tier-two Canberra 3 Node 22 7 8 7 +1 Capital
Perth 3 Node 22 6 8 8 +1 Tier-two Brisbane 3 Node 21 6 8 7 0 Tier-two Geelong 3 Node 21 6 8 7 +1 Tier-four Gold Coast 3 Node 20 6 7 7 0 Tier-three Christchurch 4 Influencer 19 6 7 6 -2 Tier-three 20 Hobart 4 Influencer 19 7 7 5 +1 Tier-three Newcastle 4 Influencer 19 6 7 6 - Tier-three Wollongong 4 Influencer 19 6 7 6 - Tier-three 1. NEXUS: Critical nexus for 2. HUB: Dominance or influence 3. NODE: Broad performance 4. INFLUENCER: Competitive 5. UPSTART: Potential steps multiple economic and social on key economic and social across many innovation in some segments, potential towards relative future innovation segments innovation segments, based on segments, with key or imbalanced performance in a few global trends imbalances innovation segments
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 44
Drivers of Economic Prosperity
3.3.3 Business Births and Deaths Business Births and Deaths as a A city with a high number of business Proportion of Geographic Units Source: Statistics New Zealand, CDC births and deaths may be a more 18% entrepreneurial. In greater Christchurch in 2011, there were 4,221 business 16% births and 5,235 business deaths. These 14% numbers are pre-February earthquake but may include closures following 12% the September 2010 earthquake. It is 10% concerning that there are more deaths than births, in both greater Christchurch 8% and New Zealand, but not unexpected 6% due to the recent economic climate. of total geographic units % Births Greater Christchurch Deaths Greater Christchurch 4% During the recession, business births # Births or Deaths as a proportion Births New Zealand Deaths New Zealand reduced in greater Christchurch, falling 2% from over 6,000 each year between 2004 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 and 2008, to only 5,538 in 2009, and 4,872 in 2010. They fell further in 2011, to only 4,221 business births. Business births in greater Christchurch, as a Christchurch Business Births and Deaths selected proportion of total geographic units in the Sector Breakdown year to February 2011 city, have traditionally been slightly higher than that of New Zealand, suggesting a Geographic Units Employees Impacted slightly higher level of entrepreneurship. Industry Sector Breakdown Sector Breakdown Business deaths increased during the Births Deaths Births Deaths recession, reaching 5,430 in 2010. They Manufacturing 3.0% 3.2% 4.5% 2.7% fell to 5,235 in 2011. Business deaths as a proportion of all businesses also fell Construction 12.1% 11.9% 8.5% 4.0% slightly to 10.8%. After recently being Retail Trade 7.6% 7.9% 23.1% 15.2% below the proportion for the whole of the country, they are now slightly above Accommodation and Food Services 4.0% 4.8% 8.5% 18.9% the proportion for New Zealand, 10.0%, possibly as a result of the September Information Media and Telecommunications 1.1% 1.1% 0.6% 2.3% 2010 earthquake. Financial and Insurance Services 7.5% 7.0% 4.9% 3.5% Following the earthquakes some Rental, Hiring and Real Estate Services 20.6% 22.7% 3.6% 0.9% businesses will have been unable to continue operating. Conversely, some Professional, Scientific and Technical Services 15.6% 12.3% 7.7% 6.9% new companies will appear, notably in the construction industry. The proportion of Education and Training 1.8% 1.2% 6.1% 3.3% both business births and deaths is likely Health Care and Social Assistance 3.5% 3.8% 3.8% 7.1% to increase dramatically and monitoring a return to historical churn rates and Arts and Recreation Services 1.5% 2.0% 1.2% 2.1% benchmarking against similar-sized Other 20.8% 21.6% 24.6% 21.6% economies may provide some insight in to potential challenges and opportunities. Source: Statistics New Zealand, CDC
3.3.4 Self Employment Self Employment as Proportion Self employment is a source of of Taxable Income, 2010 Source: Statistics New Zealand, LEED taxable income for 17.5% of people in 20% Canterbury. This is close to the national average (17.7%). The city falls behind other areas of New Zealand such as 19% Waikato (18.8%), and Otago (18.4%). As a city gets bigger and has bigger companies, a smaller proportion is 18% self-employed. 21 17%
16% Auckland Waikato Bay of Plenty Wellington Canterbury Otago Total
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 45 3/
3.4 People Migration earthquakes into account. Although there has been a loss of people, initially migration 3.4.1 Population Dynamics Permanent and long-term migration has typically been positive to Christchurch and associated with the rebuild is likely to help Christchurch is the largest city in the Canterbury, with more international people the population recover. Canterbury region. Growth in the city has arriving than departing. On average, since Ethnicity traditionally been very similar to Canterbury 1990, 70 more people per month have and New Zealand. However since the Canterbury and Christchurch have a arrived in the city than left from a total of higher proportion of people identifying as earthquakes there has been significant approximately 520 arrivals per month13. migration from the city largely to Selwyn “Europeans” (2006 Census) with 76% and Waimakariri Districts, resulting in a Since the February earthquake the trend has in Canterbury and 75% in Christchurch, 2.4% fall in population between 2010 and reversed, with more people leaving the city compared to 69% across all of New Zealand. 2011 (Statistics New Zealand estimates). than arriving. As of February 2012, The second most stated ethnicity (other than Since 2000, the average annual population 5,400 fewer students were enrolled in “other”) is M ori (6% in both Canterbury growth has been 3.6% in Selwyn and greater Christchurch schools than February and Christchurch, 11% in New Zealand) 2.5% in Waimakariri (compared to 1.2% 2011, suggesting significant movement followed by Asian (4% in Canterbury, 6% in across the country). This trend is expected by families from the city. A further 1,700 Christchurch, and 8% across New Zealand). to continue as land becomes available students re-enrolled at another school (Ministry of Education). Of those in Christchurch stating they belong for development in these areas, residents to an iwi in the 2006 Census, the most gravitate from eastern Christchurch to International migration is beginning to common iwi for Christchurch residents was western Christchurch and local body improve, however, with 230 more people Ng i Tahu/ Kai Tahu at 36%. 26% did not planning regulations remain constant against arriving than leaving on average each month know which iwi they belonged to. Ngapuhi the Urban Development Strategy (UDS). between August and November 2012. was identified by 15%, Ngati Porou by In Section 7 of this document, post- The Christchurch City population was 12% and the Ngati Kaungunu Grouping by earthquake projections of the Christchurch projected by Statistics New Zealand14 to 10%. The remaining iwi and grouping was population are described. It is anticipated grow by 12% between 2011 and 2031. identified by less than 10% (each). that the growth rate may recover to its This forecast was mostly driven by a natural pre-earthquake population within ten years, increase, with births outnumbering deaths. following an initial population loss of 2.5%. However, by 2031, net migration is expected to outpace the natural increase. Migration will be a more important source of economic growth in the future. These projections will be updated by Statistics New Zealand later in 2012 to take the impacts of the
Population Estimates Canterbury Population Change Source: Statistics New Zealand Territorial Authorities, 2011 Source: Statistics New Zealand 5.0% 400 350 4.0% 300 3.0% 250
2.0% 200 000’s 150 1.0% 100
Annual Change 0.0% 50
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 -1.0% Kaikoura Waimakariri Selwyn Timaru Waimate Waimakariri District Christchurch City District District District District District -2.0% Selwyn District Canterbury Hurunui Christchurch Ashburton Mackenzie Waitaki New Zealand District City District District District -3.0% 22
13 Calculated from international arrival and departure cards 14 Statistics New Zealand, medium projections, prior to Earthquake
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 46
Drivers of Economic Prosperity
3.4.2 Education no qualification at 23.5% (compared to Iwi in Canterbury reported (Census 2006) Adult Literacy and Numeracy 22.4% for New Zealand). Christchurch City that 33% have no qualification, 39% high performs slightly better than Canterbury school and 22% having a post school The Adult Literacy and Life Skills (ALL) with only 21.4% with no qualifications, qualification. Survey 2006 looked at the prose literacy and 15.3% with a degree or higher. Non M ori education achievement (Census and numeracy of adults, aged 25-65. The Christchurch qualification profile 2006) is 23% with no qualification, 36% In North and Central Canterbury, the underperforms against Auckland and high school and 32% having a post school proportion of 15-65 year olds with higher Wellington however they are not similar 15 qualification. literacy was 61.6% . This was above the economies and have different skill New Zealand level (57.9%) but below requirements. Central government goals aimed at other main city-regions such as Wellington The ability to retain more graduates within improving M ori education achievement (68.7%) and North Shore City and Rodney recognise that M ori with higher levels of District (67.2%). the city provides a deeper labour pool for knowledge intensive sectors and roles. qualifications are more likely to be employed There were similar results for numeracy with and more likely to earn higher incomes. 54.3% having higher numeracy, compared M ori Attainment Census data from 2006 reflects both a to 51.0% across the country. Reported highest qualification for people willingness to participate in the labour force Gradual improvements to both literacy and identifying with an Iwi is slightly higher in and an enhanced ability to gain employment numeracy in adults will contribute to improving Canterbury than across New Zealand. correlated to education levels, and median productivity and standards of living. income levels for M ori significantly higher However, within Canterbury education for individuals with tertiary qualifications than Highest Qualification attainment is lower for M ori than the those with lower level qualifications (Te Puni Higher Qualifications can result in better regional average which is consistent across K kiri website). labour outcomes including more knowledge many parts of New Zealand. intensive work opportunities and Literacy/Numeracy Selected NZ Regions Highest Qualification the potential for 80 40% higher wages. Prose Numeracy 70 35% Canterbury Qualifications 60 30% New Zealand for people in the 50 25% Canterbury region 40 20% are similar to the 30 15% rest of the country. 20 10% According to Census 10
% of people aged 25-65 with higher literacy 0 5% 2006 (Statistics New New Zealand Nth & Central Waikato Auckland Nth Shore Canty Region City City & Rodney 0% Zealand), a slightly No School Post-School Bachelor or Elsewhere South Canty Wellington Counties- Waitakere Northland Qualification Qualification Qualification Higher included higher proportion & Otago Region Manukau City Region in Canterbury have Source: Census 2006, Statistics New Zealand Source: Adult literacy & Life Skills Survey (2006), Education Counts
Education System (72.0%), Wellington (84.6%) and Dunedin Times Higher Education (UK) in 2012 Christchurch has numerous schooling (76.8%). ranked the University of Canterbury options including public, private and The tertiary education system is a somewhere in the range of 301-350. This integrated schools and is recognised key component of a city’s knowledge is a relatively average position compared nationally for its high-quality school network. infrastructure. The greater Christchurch area to other universities in Oceania, with the University of Melbourne ranked 37, and In 2010, 70.1% of school leavers in has two universities (University of Canterbury seven other universities in the top 200, Christchurch had NCEA Level 2 or above. and Lincoln University). In addition the city including the University of Auckland at 173. This is slightly above the proportion has Christchurch Polytechnic Institute of This recent statistic is likely to reflect the nationwide (68.8%), but below most other Technology (CPIT) and the University of impact of the earthquake as in 2009 it was core cities: Auckland (74.1%), Tauranga Otago Christchurch Campus. International Education – Canterbury Schools Public Tertiary Private English Primary Secondary Univserities Polytechnics Tertiary Language TOTAL Number of Students 851 1,738 3,239 1,500 1,385 8,072 16,785 23 Tuition $m 2.1 14.8 38.5 8.1 3.6 21.0 91.0 Of which levies 0.0 0.1 0.2 0.0 0.0 0.1 0.4
Average tuition (excl levy) 5,941 8,474 11,819 5,344 2,576 2,584 5,392
Source: Infometrics, NRB and Skinnerstrategic 15 Margin of error of 6.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 47 3/
ranked 188th. The University of Canterbury has a particularly strong engineering school. Estimated Age Breakdown Christchurch City As at 30 September 2011, the University of Age 0-14 15-39 40-64 65 + TOTAL ALL AGES
Canterbury had 18,175 students, 85% of 2006 19% 37% 31% 13% 361800 which were undergraduates. The biggest school is the College of 2011 18% 35% 32% 14% 367700 Engineering (20.3%), followed by the 2016 18% 34% 32% 16% 374778 College of Arts (19.4%), Science (19.3%), 2021 17% 34% 31% 17% 384876 Education (16.8%) and Business and Economics (15.8%). 2026 16% 34% 30% 20% 394676 Lincoln University has an agriculture base. 2031 16% 33% 30% 21% 403424
In 2010 there were 3,447 enrolled students, Source: Statistics New Zealand (pre Earthquake), CDC including 526 doing Masters or PhD Degrees. Faculties include Agriculture and Life Sciences; Commerce; Environment; and The Impact of Population Ageing on Skills qualification levels within the economy Society and Design. Availability is constantly aligned to the needs of the business sector and changing complexity International education is a key contributor As with the rest of New Zealand, the and knowledge intensity of the business to the local economy. The sector brings in proportion of 65+ year-olds in Christchurch is sectors and work types. valuable revenue both from fees, expenditure projected to significantly increase. Between from students, and expenditure from 2011 and 2031 the proportion of people In the future, it is likely that many businesses visiting families. The sector also creates over 65 is expected to increase from 14% to will come on to the market as owners valuable links to overseas networks and 21%. This will have significant implications move in to retirement. It is likely that many students choose to stay in the city, for the city, both in the provision of services these businesses, similar to farms, will be diversifying the labour market. The table for older people as well as the impact on unaffordable for individuals. We may see below illustrates students and tuition fees the productive capacity of the city with most more corporate-style buy outs or multi- in Canterbury (Infometrics, NRB and likely a significantly smaller proportion of the party ownership models in New Zealand Skinnerstrategic, 2008)16. population engaged in work. businesses in the future. In Canterbury, this study estimated that the The skill profile of workers is also likely average annual living cost for these students to change – with younger workers in was $17,253. The total economic impact of the workforce typically having higher this sector for Canterbury, using a multiplier qualifications than those they will be approach, including value-added plus taxes replacing. In workforce planning it will and levies, was estimated at $269 million. be important to ensure that the mix of
RESPONSE AFTER EARTHQUAKES
Schools International Damage After the earthquakes, greater In February 2011 some 6,000 Physical damage to buildings and land has Christchurch experienced relocation international students were studying in been significant: 207 of the 215 state and of 18 schools and almost 7,000 Christchurch. Following the earthquake integrated schools in greater Christchurch students. Within a month all students approximately 1,500 left the region, were damaged to varying degrees. Repairs had schools to go to. A total of 55% of either internally migrating to other are estimated at around $750 million. students were involved with site-sharing cities in New Zealand or leaving New Independent schools, such as Christ’s arrangements, such as Avonside Girls’ Zealand. International enrolments College and St Andrew’s College, also High School and Burnside High School. were down 31% on the same period suffered and the full extent of this damage There was an increase in development for 2010. There were decreases of is still being assessed. The major TEI’s face of online resources for students and 26% in TEIs, 19% in schools and 35% a combined repair cost of around $300 parents to access at home. A broad- in language schools. The Economic million. based programme was developed in Recovery Plan recognises International Greater Christchurch will experience conjunction with Sport Canterbury to Education as a severely damaged more than $1 billion worth of rebuild address lost sporting and recreational sector and consequently significant in the education sector and, through opportunities for 12,000 students. attention and investment has been the implementation of the Directions The Youth Futures Canterbury group, channelled in to this recovery project. for Education Renewal, greater 24 which included leaders from TEIs, ITOs, Christchurch is working hard to ensure secondary schools, government agencies that its reputation as a leading region for and CDC, was established to create education will be maintained in the future. opportunities for young people.
16 “The Economic Impact of Export Education”, A report Jointly Commissioned by Education New Zealand and the Ministry of Education, Prepared by Infometrics, NRB and Skinnerstrategic, June 2008.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 48
Drivers of Economic Prosperity
3.4.3 The Labour Market During the recession it became easier to KEY THOUGHTS FOR THE CITY find all types of labour, according to survey Labour Participation results. However, from December 2010 it Labour Christchurch generally has a high labour has become more difficult for businesses to »»Increase labour productivity to offset the force participation rate. Throughout 2010 access skilled labour17. In the March 2012 lower proportion of people working the average labour force participation rate quarter, a net 31% of businesses in the Ensure opportunities exist for new in Christchurch was 69.5 per cent, above »» NZIER Quarterly Survey of Business Opinion migrants post-recovery to transition in to the 68.1 per cent for all New Zealand. Since in the South Island found it harder to source other work opportunities the earthquakes, however, the participation skilled labour than in the previous quarter rate has fallen to 65.8% in the September (38% found it harder, 9% found it easier18). »»Ensure skill shortages are addressed 2011 quarter as people removed themselves This suggests that finding skilled labour quickly and efficiently from the workforce. This is difficult to explain is becoming a potential constraint on the »»Ensure connections between region and but is perhaps due to other commitments growth of Christchurch businesses. city allow for workforce movements such as family, or a lack of faith in the labour During the rebuild period, there will be market. Women’s participation dropped »»Ensure we have a proposition to attract tension on worker availability within sectors from 64.5% in September 2010 to 59.2% workers in an increasingly mobile and such as manufacturing and agriculture as in September 2011 (Canterbury, HLFS, and dynamic labour market workers choose to switch to the potentially Statistics NZ). Growth in the Christchurch economy will more lucrative construction sector. This is »» be largely driven by knowledge intensive In the short to medium term it is likely that likely to persist only through the peak rebuild sectors, requiring skilled labour. the proportion of people actively engaged period; however it may have implications for in the workforce or seeking work will return wage rates, which will affect profitability. to pre-earthquake levels. In the long term it is expected that the ageing population Labour Migration will have a significant impact on workforce Migrants assist in meeting the demand participation. An increase in the retirement for labour, and labour shortages are often age would change participation rates and, as why people chose to move to a new city. older people tend to be more experienced, Migrants are typically attracted by recreation this would have a positive impact on labour opportunities including a good arts scene force experience levels. The extent of the and key infrastructure such as education, impact on labour decisions is difficult to health and transport. predict because the level of superannuation People attracted to Christchurch city have available is too low to allow some people higher qualifications than those born in to immediately retire, and some continue New Zealand. In the 2006 census, 23% to work beyond the age of entitlement to of those born overseas had a post-school superannuation because they enjoy working. qualification compared to only 14% for those If people continue to work for longer, born in New Zealand. Every major area of productivity improvements and technology origin had higher qualifications than New uptake may be decelerated. Zealand-born residents of Christchurch, Ease of Finding Skilled Labour with the exception of the Pacific Islands. A total of 45% of Christchurch residents An impediment to business growth is the born in North America hold a post-school degree of difficulty in finding appropriate qualification. This data suggests that labour. Growth can be subsidised in the Christchurch is attracting skilled labour. short term by working longer hours, but it is Christchurch appears to be slightly more not a long-term solution. attractive to skilled migrants than the rest of The NZIER Quarterly Survey of Business New Zealand, where 22% of foreign-born Opinion produces indicators of businesses’ residents hold a post-school qualification. difficulty in finding skilled and unskilled However, migration can also erode the skill labour, compared with the previous three level of a city, especially if those choosing to months. This is reported at the South Island leave the city are highly skilled. (and two North Island areas) level. The earthquake rebuild will introduce skilled migrants to the city. Some will fill technical roles required for the rebuild, and others will be returning skilled workers wanting to assist in the economic recovery. This will increase 25 the skill level of migrants in the city.
17 Note that firm’s expectations of skilled labour can change through time. For example, when labour is freely available standards rise and this higher level of expectation can continue even when labour becomes tight again. 18 9% found it easier, 46% found it the same, 38% found it harder, and 8% na. Once the 8% are extracted from the series the net becomes, 41-10=31
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 49 3/
3.4.4 Income and Quality of Life Average Weekly Household Income, 2011 Source: Statistics New Zealand Household Income 1800 Average weekly household income in Canterbury has followed a similar pattern 1600 in recent years to New Zealand. In 2011, 1400 the average weekly household income was $1,521, just below the New Zealand average 1200 ($1,525). This lies below Auckland and 1000 Wellington regions, but above some of the other areas in New Zealand (Waikato, Bay of 800 Plenty and Otago). 600 In Canterbury in 2006, the median weekly 400 household income was $1,132NZD. This appears to compare well with similar sized 200 Australian cities: 19 0 »»Gold Coast, $1,016AU($1179NZD ), New Zealand Auckland Waikato Bay of Plenty Wellington Canterbury Otago »»Newcastle $1,300AU($1508NZD), Region Region Region Region Region Region »»Wollongong $955AU($1108NZD), Source: Statistics New Zealand »»Sunshine Coast $855AU($992NZD) and »»Greater Hobart, $904AU($1049NZD). (Source: Australian Census 2006) Average Weekly Household Income
Canterbury and New Zealand Source: Statistics New Zealand Quality of Life 1600 Standard of Living, supported by a healthy income, is not the same as Quality of Life. 1400 Before the earthquakes, Christchurch residents enjoyed a high quality of life, despite a lower income than Auckland 1200 or Wellington. In the Big Cities Survey, 95% of residents rated their perception 1000 of their quality of life as good or extremely good, the highest level in the country. Identified reasons for the high quality of 800 life for residents included family (53%), Canterbury financial stability (29%), health (29%) and New Zealand environment/location (27%). 600 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 The earthquakes have had an impact on the quality of life of some residents in terms of housing, city amenities and financial strain on some families. Perception of Quality of Life Quality of Life is important when residents - Good or Extremely Good Source: Big City Survey, 2010 are choosing where to locate, which can in 100 turn influence where companies choose to establish themselves. By seeking to recover
96 and improve over the long term the quality of life that Christchurch can offer, the city can become a destination of choice in New 94 Zealand and Australia, attracting skills, talent, businesses and investment, and 92 consequently helping the economy grow further. 90 as good or extremely
26 % of respondents rating perception life 88
86 Total Auckland Hamilton Tauranga Porirua Hutt Wellington Christchurch Dunedin (main cities)
19 Using annual average of 2006 exchange rates , AUD – NZD (1.16)
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 50
Drivers of Economic Prosperity
3.5 Connectedness Commuter Pain Index 2010 Source: IBM 3.5.1 Congestion 100
Before the earthquakes, Christchurch 90 enjoyed relatively low congestion. The IBM Commuter Pain Index measures the 80 discomfort caused by commuting. This 70 includes factors such as time driving and the 60 type of driving. Christchurch compares well with international cities with a level of 23, 50 below Auckland (28) but above Wellington 40 (17). Low congestion and commuter times 30 improve city efficiency and productivity. The ease of travel within the city is partly due to 20 its small size with individuals and businesses 10 in close proximity to each other. 0 Travel patterns have changed significantly Beijing Johannesburg Auckland Berlin Montreal Wellington Houston since the earthquakes as road damage, Mexico City Toronto Amsterdam Christchurch New York Melbourne Stockholm infrastructure repair and business and residential location changes have diverted traffic flows on to roads not designed to take the volumes now experienced. A congestion survey undertaken by the Christchurch City Council and the New Zealand Transport Authority20 showed that the speed of travel across Christchurch routes had decreased by up to 16%, and on Stage Highways had decreased by up to 35%. Post-earthquake infrastructure repair, planning and build work will return congestion patterns to normal. An opportunity exists to achieve improved travel ease and take a long-term view of the city infrastructure needs to ensure productivity and efficiency is maximised. Most (76%) of Christchurch commuters travel alone in a private car, compared to 50% in Wellington, and 74% in Auckland.21
Christchurch Congestion
Average pre EQ Average post Average Speed Average post EQ time for 10km EQ time for Additional pre EQ (km/hr) speed (km/hr) % difference journey (mins) 10km journey minutes
All Christchurch Routes
AM peak 34.7 30.8 -11% 17.3 19.5 +2.2 (13%) Inter peak 42.7 39.0 -9% 14.0 15.4 +1.4 (10%) PM peak 36.0 30.4 -16% 16.7 19.7 +3.0 (18%)
Christchurch State Highways
AM peak 68.4 44.3 -35% 8.8 13.5 +4.7 (53%) Inter peak 79.1 66.5 -16% 7.6 9.0 +1.4 (18%) PM peak 77.8 60.5 -22% 7.7 9.9 +2.2 (28%)
Source: NZTA and CCC, April 2011 congestion survey 27
20 NZTA and CCC, April 2011 congestion survey 21 IBM Global Commuter Pain Index, December 2010
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 51 3/
3.5.2 Ports Several airlines use the airport and Enable Networks Ltd, a joint venture Lyttelton, the Port of Christchurch, is the direct flights are available to Rarotonga, between Crown Fibre Holdings Ltd and largest port in the South Island, with over $5 Nadi, Brisbane, the Gold Coast, Sydney, Enable Services Limited, has been rolling billion in exports for overseas cargo departing Melbourne, Singapore, Osaka and Tokyo. out ultra-fast broadband for Christchurch in the 2011 year. By volume, Lyttelton However there is a limited air freight capacity residents and businesses. This will reduce accounted for 13.8% of exports from New from the airport. PwC found that the the cost for existing fibre users and allow Zealand in 2011, up from 12.9% in 2009, South Island is “under-exporting” around more businesses to connect and enjoy and behind only Auckland and Tauranga 17,700 tonnes and “under-importing” the increased efficiency that ultra- fast (Ministry of Transport). around 12,000 tonnes by air. The potential broadband provides. Enable Networks range of wholesale business products was released The key commodity exports in 2011 from demand for air freight trade by South Island in February 2012 and will be available to Lyttelton Port were22: exporters and importers is expected to increase, suggesting that the gap in capacity 90% of Christchurch businesses by the »»Dairy produce (and eggs and honey) will worsen24. The key commodity export end of 2015. Its roll out is expected to have $1,988 million destinations from Lyttelton and Christchurch significant economic benefits for the city. »»Confidential Items $592 million International Airport in 2011 were25: Early estimates suggest that over the period 2009 to 2031, the cumulative value-added »»Wool and animal hair $461 million »»Australia $13,766 million impact of the UFB scenario for Christchurch »»Meat and edible offal $376 million »»China $6,819 million City is estimated to be around $20097.4 billion »»Boilers, machinery and mechanical »»United States $4,629 million through both construction impacts and appliances $255 million »»Japan $3,912 million productivity impacts (for example, being able »»Wood and articles of wood, wood to quickly adopt new technology, increased »Korea $1,774 million charcoal $165 million » efficiency, online collaboration and better »»United Kingdom $1,680 million 27 »»Fish and seafood $160 million work-life balance). »»India $1,351 million »»Preparations of fruits, vegetables and Due to the small size of Christchurch and its nuts $103 million distance from other cities, connectedness 3.5.3 Broadband connections infrastructre, such as ports and broadband, Despite being able to resume operations In the 2006 Census, 67% of households in are of strong importance. shortly after the February earthquake, the Canterbury had internet access, on par with Port has suffered damage as a result of the Australian cities (Melbourne 66%, Sydney KEY THOUGHTS FOR THE CITY earthquakes. Repair and rebuild presents an 68%, Brisbane 69%, Adelaide 60%). Connectivity opportunity to review the capacity needed for The Household Use of Information and future export volumes, particularly from the Communication Technology: 2009 Survey »»Encouraging businesses to realise agriculture sector. (Statistics NZ) examines the infiltration the benefit of UFB Additionally, the limited availability of of technology by region in New Zealand. »»Maximising the benefits from roll–on and roll-off facilities at the seaport The number of households with internet existing, new and improved is problematic for some businesses. This access increased between 2006 and 2009; infrastructure systems may need to be considered to prevent the most households in Canterbury (78%) had »»Using economic outcomes to drive relocation of these businesses in the future. internet access in 2009, up from 67% in investment in infrastructure 2006. This is slightly above the national Christchurch International Airport is a average of 75%. »»Improving access to ports where major transport hub for the South Island problems exist and operates 24 hours a day. 5.5 million Fewer households had access to broadband passengers travelled in and out of the airport (64%); however this has nearly doubled »»Increasing international air links for in 2011. Additionally, 26 million kilograms since 2006 (34%). This is the third highest people and freight of international cargo moved through the of New Zealand’s regions, behind Auckland airport and there were 120,000 aircraft (72%) and Wellington (69%). It is notable movements, including military 23. that, in 2009, 74% of Australian households had broadband internet access26.
28
22 Statistics New Zealand, Exports for Overseas Cargo (fob NZ$), may include a degree of re-exports 23 http://www.christchurchairport.co.nz/AboutUs/CorporateInformation/FactsAndFigures/ 24 “Opening up the South, A report to the Canterbury Development Corporation”, PWC, September 2011 25 Statistics New Zealand, Exports for Overseas Cargo (fob NZ$), may include a degree of re-exports 26 Australian Bureau of Statistics 27 An Initial Assessment of the Economic Impact of the Government’s Ultra-Fast Broadband Initiative on Christchurch City”, January 2010, Prepared by Dr Garry McDonald, Market Economics Ltd and Amy Marshall and Anthony Thomas, Canterbury Development Corporation
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 52
Drivers of Economic Prosperity
3.6 Business Environment KEY THOUGHTS FOR THE CITY 3.6.1 Ease of Doing Business The Business Environment Ease of doing business is important for Creating an environment in which retaining and attracting businesses, and »» Christchurch retains and grows current ensuring that businesses can operate as operating businesses efficiently as possible. Many businesses and developers in greater Christchurch »»Ensuring the consent process is are operating under unique conditions. streamlined, transparent and accessible The earthquakes have caused significant to support business birth, attraction and disruption to business and government retention processes, transaction costs and in some cases the loss of customers and workers. If measured today, the ease of doing business in greater Christchurch would likely be low comparable to other similar-sized cities. It is expected that a return to normal business conditions will occur within a few years. Access to insurance remains a significant issue for businesses. Businesses are facing uncertainty and increased costs. This could threaten the rebuild, with building owners unable to obtain the insurance necessary to borrow funds needed to redevelop damaged sites. Increased excesses and premiums also impact on operating margins for businesses. Post-recovery factors which will influence the ease of doing business for Christchurch will include the availability and cost of suitable properties; consent times and relationship with the Christchurch City Council; access to skilled and suitable workers; and reasonable commuting times around the city.
3.6.2 Property Market The loss of buildings within the central city has had a major impact on businesses, with many finding new premises. They have relocated to business parks and industrial zones such as Addington and iZone (Rolleston), with some in temporary accommodation. Businesses operating in substandard accommodation may see reduced productivity, and generally speaking the roading infrastructure was not designed to cope with current levels of occupancy so this has slowed traffic. Also, a number of residents and some businesses have re-located to the Selwyn and Waimakariri districts. The central city is likely to have a higher cost structure driven by higher building values and code compliance. 29
28 Christchurch City Council
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 53 3/
3.7 Natural Resources The Canterbury Water Management Strategy (CWMS) has been developed 3.7.1 Mining to address Canterbury water issues, Mining is currently a small sector within including the deteriorating quality of Christchurch and Canterbury. The key both surface water and groundwater, the operators in this sector are Solid Energy loss of cultural value and recreational (Christchurch), Glass Earth Gold (Otago), opportunities and the declining and Oceana Gold (Reefton, Otago). The availability and reliability of water for central Government business growth agenda both the agricultural and energy sectors. policy suggests a desire to increase mining The strategy sets out targets for water and exploration in the coming years. The management for the next 30 years. World Bank estimates that New Zealand Leadership of the strategy lies with the is ranked eighth in the world for natural Canterbury Mayoral Forum, with the capital per capita, suggesting there are strategy being prepared by a multi- significant opportunities. Christchurch is a stakeholder Steering Group. logical landing place for mining company Work was commissioned by CDC with headquarters alongside Solid Energy. the Agricultural and Economic Research Christchurch offers this sector a city Unit (AERU) at Lincoln University, to look at business services sector, two universities, the economic value of irrigating all available Lyttelton Port and an international airport. and suitable land and the flow-ons to 3.7.2 Irrigation businesses which support to the agricultural sector. The results suggest if an additional Water is an important resource for 250,000 hectares of land is irrigated primary industries, power generation, (suggested availability, CWMS), this results and the tourism sector in Canterbury. The in an additional $1.1 billion, and provides region currently accounts for 54% of the employment for an additional 7,900 workers nation’s water allocation by volume and in Canterbury. 70% of New Zealand’s irrigated land is in Canterbury. Excluding hydro-electricity (non- 3.7.3 Environmental Protection consumptive use), 83% of water is currently Protecting the environment is important allocated to agricultural irrigation and 12% when considering natural resources. This for stock drinking water supplies. is to support our tourism sector, the quality The Irrigation Acceleration Fund (IAF) was of life for our residents and to avoid costly allocated $35 million over five years in the remediation in the future. 2011 Budget to support the development of irrigation infrastructure proposals to the KEY THOUGHTS FOR THE CITY ‘investment-ready’ prospectus stage. As well as being technically and commercially Natural Resources sound, they must have strong community »»Promoting Christchurch as a head support. office location for mining companies »»Leveraging opportunities created by irrigation projects »»Ensuring environmental impacts are considered for natural resource projects
30
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 54
Drivers of Economic Prosperity
3.8 Institutions and Selwyn is governed by the Selwyn District Funding sources in Canterbury include: Governance Council and Waimakariri by the Waimakariri »»Canterbury Community Trust, which Well-functioning institutions and governance District Council. The regional council, invests in communities Environment Canterbury, manages the region’s processes are important to ensure that that Canterbury Business Recovery Trust natural resources and covers all three districts. »» economic activity is well supported and Fund, which assists in earthquake- sustainable development is achievable. This In the post-earthquake environment these affected businesses will be particularly important during the councils are supported by the Canterbury »»Red Cross recovery period. Earthquake Recovery Authority (CERA) and the Christchurch City Development »»Vodafone Foundation Canterbury Fund 3.8.1 Greater Christchurch Institutions Unit (CCDU). CERA’s purpose is to oversee »»New Zealand Trade and Enterprise and Christchurch City’s local government recovery following the earthquakes with the Ministry of Business, Innovation and agency is the Christchurch City Council a timeframe ending in 2016. The CCDU Employment (CCC). The Big City Quality of Life Survey is tasked with master planning the »»Canterbury Economic Development Fund 2010 shows that most residents have redevelopment of Christchurch’s central city. confidence in local government decision- »»Various academic trusts to support the The key business support networking making. A total 53% of residents either work of the universities organisations include Canterbury agree or strongly agree that they have Development Corporation, Canterbury confidence in their local Council to make Employers’ Chamber of Commerce, decisions that are in the best interests Canterbury Business Leaders Group, of the city (2010). This is likely to have New Zealand Manufacturers and Exporters changed following the earthquakes, as is Association and Institute of Directors. anticipated following a natural disaster.
A Selection of People from Canterbury with Governance Roles Nationally – 2013
Person Public Sector Private Sector
Bruce Irvine Chairman of Christchurch City Holdings, Director of PGG Wrightson Ltd, Director of MARAC Finance, Director of Heartland New Zealand LTD, Director of House of Travel Holdings Ltd. Stephen Collins Council Member of Christchurch Polytechnic Institute of Technology, Director of Harcourts International, Director of Syft Technologies BusinessNZ Council Humphry Rolleston Director of Sky Television Ltd, Director of Infratil Ltd.
Don Elder Director of Coal New Zealand International Ltd, Director of the World Coal Institute Rod Carr Director of the Reserve Bank of New Zealand, Board of Canterbury Director of Lyttelton Port Company Ltd, Vice Chancellor of University of Employers’ Chamber of Commerce, Chairman of the National Canterbury Infrastructure Advisory Board Hon Ruth Director of Kiwi Innovation Network Ltd. Chairman of Syft Technologies Ltd, Chairman of Jade Software Corporation Richardson Ltd, Director of Synlait Milk Ltd and Synlait Ltd Sue Suckling Chairman of Advanced Research Institute Establishment Board, Chair of Barkers Fruit Processors Ltd, Director of Restaurant Brands, Chairman of NZQA Director of SKYCITY Entertainment Ltd, Director of Oxford Clinic Hospital Mike Steinhouse Chairman of Canterbury Medical Research Managing Director of Sheffield South Island Ltd
Hon Philip Burdon Chair of Asia New Zealand Foundation, Chairman of APEC Business Owner of Meadow Mushrooms Advisory Council, Chair of Great Christchurch Buildings Trust Peter Davie President of Canterbury Employers Chamber of Commerce CEO of Lyttelton Port Company, Director of the Port of Portland (Australia)
Peter Townsend CEO of Employers’ Chamber of Commerce, Director of NZ Trade and Enterprise, Board of Ministry of Science and Innovation (MSI) Innovation Board, Chairman of the Territorial Force Employer Support Council Dr Andrew Pearce Principal of the Hillary Institute, Chairman of the Energy Efficiency and Director of Christchurch City Holdings, Director of Bank Of New Zealand Conservation Authority Sue Sheldon Director of the Reserve Bank of New Zealand Chairman of Freightways Ltd, Director of Contact Energy Ltd, Director of Telecom Corporation of New Zealand Ltd, Director of Paymark Hon David Cagill Chair of the Electricity Commission, Chair of the ACC Stocktake Group, Chair of the Education New Zealand Trust, Associate Member of the Commerce Commission, a Board member of the Energy Efficiency and Conservation Authority, and Deputy Chair of ECan Garth Carnaby Deputy Chair of The Institute of Environmental Science and Research Chair of the NZ Synchrotron Co Ltd, Director of the Australian Synchrotron 31 Ltd, Chair of the Canterbury Development Corporation Company Ltd, Director of hte Australian Synchrotron Holding Co Ltd Mark Solomon Kaiwhakahaere (Chair) Te Rananga o Ngai Tahu Director of Te Hapai Mauri Ltd (Social), Director of Te Pataka o Tangaroa (Fish Assets), Director of Te Pataka o Rauru (Commercial) Jim Boult Chairman of New Zealand Airports Association CEO of Christchurch International Airport
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 55 3/
3.8.2 National Representation It is crucial that Christchurch has people As a major New Zealand city, Christchurch involved in governance positions with both is well represented in national government. public and private sector organisations. The city has five electorates: Wigram, Port These people are connected with other Hills, Christchurch Central, Christchurch regions both nationally and internationally. East and Ilam, with parts of the city This connectedness allows Christchurch falling in to the Waimakariri and Selwyn to be well represented and to be seen as electorates. The Maori electorate for the a place where our nation’s leaders gather. South Island is Te Tai Tonga. The greater The list above was compiled to highlight Christchurch area is therefore represented the degree of governance connectivity by eight MPs in Parliament. that Christchurch has with the rest of New Zealand and globally. This small cross- Four MPs from greater Christchurch section represents those people involved are currently in Cabinet. with national organisations, in both public »»The Hon Gerry Brownlee is the electorate and private sectors. MP for Ilam and is also the Leader of the House, Minister for Canterbury Earthquake Recovery, Minister of Transport, Minister Responsible for the Earthquake Commission and a Member of various committees including the Business Committee. »»The Rt Hon David Carter is the Speaker of the House. »»The Hon Amy Adams is the electorate MP for Selwyn and is also the Minister for the Environment, Minister for Communications and Information Technology, and the Associate Minister for Canterbury Earthquake Recovery.
32
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 56
Drivers of Economic Prosperity
3.9 Earthquakes Companies’ revenue levels were more Recover Canterbury frequently impacted, reflecting the difficulty The 2010 and 2011 Earthquakes Recover Canterbury was established or reluctance to quickly alter staff levels. A after the Christchurch earthquakes to On 4 September 2010 an earthquake of total of 40.3% of companies saw a decrease work directly with earthquake-impacted magnitude 7.1 occurred near the city and in revenue as a result of the earthquakes, businesses to accelerate business recovery caused significant damage but no fatalities. however 21.8% saw an increase. Companies and prepare businesses for future growth. This earthquake was followed by a series in the Professional, Scientific and Technical The organisation is a collaboration between of aftershocks including a significant Services; Manufacturing; and Retail and CDC, Canterbury Employers’ Chamber magnitude 6.3 on 22 February 2011. This Wholesale were more likely to see a decrease of Commerce and various government earthquake caused massive damage to the in revenue, and those in Construction departments involved with business support. central city and some suburban areas and and Hospitality were more likely to see an Recover Canterbury works with individual resulted in the death of 185 people. Further increase in revenue. There is a redistribution businesses and groups of businesses, aftershocks have occurred, including a 6.4 impact: companies in the hospitality sector providing a range of targeted and relevant aftershock on 13 June 2011 and a 5.8 and were likely to have either seen a reduction tools and services, from training to business 6.0 on 23 December 2011, which caused or an increase, while only 15.2% saw no resiliency coaching, mentoring, referrals and no further fatalities but significantly more change. As some hospitality sectors saw a some financial assistance. As of June 2012 building damage. decreased customer base, others picked up Recover Canterbury has been in contact the extra business. 3.9.1 Impact of the Earthquakes on with around 6,700 Canterbury businesses, Businesses Other issues faced by businesses identified providing in depth support provided in this survey included relocation (17.6% Christchurch businesses faced many to around 1,300 businesses. Recover relocating either temporarily or permanently); challenges following the earthquakes, Canterbury has assisted more than 325 difficulty renewing insurance (9.2% of with issues such as access to premises businesses access financial support from businesses have had difficulty and 38.2% (especially for those businesses located in the Canterbury Business Recovery Trust have not renewed); staff retention (28.1% the central city), loss of customers, forced and has helped 264 businesses access the of businesses have found retention harder, suspension of trading due to damage and Red Cross’ Independent Advice for Small especially larger businesses and those in the Detailed Engineering Evaluations. For many Business grant. Recover Canterbury has Hospitality sector) and recruitment (23.6% businesses, issues relating to customer base also worked with more than 540 Canterbury of businesses report difficulties, especially and physical constraints are continuing. businesses to help them access training the Construction sector). through New Zealand Trade and Enterprise’s Numerous surveys were undertaken to try Capability Building voucher scheme and has and gauge the level and type of problems helped nine groups of businesses to promote businesses were facing. In September 2011, the reopening of or re-establishment of the Department of Labour performed a major various precincts around Canterbury, survey, contacting around 1750 employers such as Victoria Street, Edgeware Village, still operating28 across Central Christchurch, Sydenham, Papanui and Sumner. Waimakariri, Selwyn and Banks Peninsula. This survey found that 18.2% of businesses Recover Canterbury is funded to operate decreased their number of staff directly until 30 April 2013. due to the earthquakes. This was more likely in Professional, Scientific and Technical Services; Manufacturing; Retail and Wholesale and Hospitality. Conversely, 38.0% of construction companies increased their staff due to the earthquakes.
33
28 A Changing Landscape: The Impact of the Earthquakes on Christchurch Workplaces, Labour and Immigration Research Centre, The Department of Labour, December 2011
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 57
Drivers of Economic 3/ Prosperity
3.9.2 Impact of the Earthquakes 3.9.3 Other Earthquake Issues 3.9.4 Newcastle Earthquake on the Economy Businesses in Christchurch have been Newcastle city in Australia experienced a The September earthquake hit Canterbury impacted by the rarthquakes through magnitude 5.6 earthquake on Thursday in a period where it was still struggling insurance issues, building and location 28 December 1989, killing 13 people. from impacts of the Global Financial Crisis, considerations, staffing problems and While this earthquake was less devastating although early signs of recovery were in some cases by access to public than those experienced by Christchurch, beginning to appear. As the aftershocks infrastructure. Road works and road closures it was one of Australia’s most significant continued through 2011, the global have caused increased congestion which recent natural disasters and it affected economic situation also began to deteriorate has decreased efficiency across the city. the CBD. There was significant damage again. These two negative effects mean that The congestion survey undertaken by to buildings estimated at $4 billion it can be difficult to separate out the impact CCC and NZTA showed that in April 2011 including 300 buildings being demolished of the earthquakes on the economy. speeds across all Christchurch routes had and 1,000 people made homeless. Estimated (Infometrics Ltd) Gross Domestic decreased by up to 16% while on State The earthquake occurred at a time of Product fell by 5.9% across the economy Highways they had decreased by up to economic stress, the 1987 stockmarket between the years ended December 2010 35%. Infrastructure works continue to cause crash. Valuable lessons for Christchurch 31 and 2011 respectively. This compares to delays around the city, although measures from the Newcastle experience include : an estimated increase of 1.4% across the have been taken to mitigate this problem »»The longer than expected recovery country. This suggests that the impact including the Transport for Christchurch process. This was despite the lack of of the earthquakes on the Christchurch website, which allows road users access aftershocks (only one minor aftershock economy could be around 6 to 7% of to information about major road works and was recorded) and the central city annual GDP. The sectors which saw closures to help avoid delays. re-opening 12 days after the event. It the biggest reductions29 were Cultural Other major public infrastructure that is likely took years for life to return to normal and Recreational Services (12.7%) and to have an impact on businesses and growth and for residents to accept the Accommodation, Cafes and Restaurants in the city includes:30 changes which had affected them and (11.7%). This reflects the significant effect »»Orion’s network, with significant outages their communities. This was further on Tourism and the fall in guest nights of occurring in the immediate aftermath of exacerbated by problems associated 18% between 2010 and 2011. the February earthquake and damage to with reconstruction, insurance and legal There have been interesting dynamics in the the company’s distribution network. issues, which took months to overcome. labour market since the earthquakes. Initially »»Lyttelton Port suffered significant damage »»Buildings being deemed unsafe well after there was an increase in the Christchurch to infrastructure and facilities, yet, with the event. Buildings that were built using unemployment rate from 6.7% in the the exception of cruise trade, has been outdated design practices, particularly December 2010 quarter to 8.1% in the able to maintain cargo movements. unreinforced masonry, were shown March 2011 quarter. The rate dropped back to be likely to fail even in short mild »»Damage to roading impacted public to 6.6% in June 2011, with a significant fall earthquakes, resulting in the need for a transport and temporary buses were used in the participation rate. The unemployment revision of building codes. for some time. Red Bus Ltd suffered rate at the March 2012 quarter was 6.4%, some damage to its workshop building. »»The importance of including social rising to 7.5% in June 2012 (there is issues in overall recovery planning. This »»KiwiRail’s four business units in significant volatility in the series). includes helping people to take charge Christchurch saw some damage, leading of their lives so they are able to plan and to a decrease in freight and passenger implement their own recovery. units. »»The importance of building and »»Water supply and waste water disposal strengthening networks to enable renewal infrastructure damage caused disruptions during a recession. Ensuring clear to many businesses, particularly communication exists between relevant manufacturing companies located on the parties, including the public, and that eastern side of the city. roles and responsibilities are clearly »»The Christchurch International Airport defined, was important. suffered minor damage and was »»A degree of uncertainty can protract able to re-open quickly following the recovery for businesses and social earthquakes. conditions. »»For many of these public infrastructure systems, insurance claims may cause significant issues in repairing damage 34 efficiently and effectively.
29 With the exception of mining which fell an estimated 14.5% but from a very small base 30 “Christchurch Economic Infrastructure Stocktake”, Canterbury Development Corporation, September 2012 31 “Newcastle Earthquake Recovery Guide – 1st Edition – 6/2/90”, Disaster Welfare Recovery Centre, Newcastle; and “Lessons in Emergency Response and Recovery from the 1989 Newcastle, Australia, Earthquake”, H.J Stuart, 1993 National Earthquake Conference; and “An Interim Report on the Newcastle Earthquake”, Dr GR. Walker, CSIRO Division of Building Construction and Engineering, Sydney
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 58
dedicated to innovation economic growth quality of life
4/ Central City
35
29 Christchurch Central Recovery Plan
background paper to the christchurch economic development strategy A Prosperous City
ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 59 4/
A Central City area is a place of intense clustering of businesses, supplemented with hospitality and retail businesses. Typically businesses are from knowledge intensive sectors that have low space consumption per person.
4.1 Pre-earthquakes includes Hagley Park). A breakdown in key Business Services (49%) and Government A successful inner city will see significant industry statistics prior to the earthquakes Administration and Defence (49%). The business and retail activity by day, supported is given in the table below. The central area single largest employment sector in the by afterhours activity in the evening and hosted around 16% of all geographic units central city area was Property and Business weekends. The Christchurch central city in Christchurch and 28% of employees Services with over 12,000 employees. in Christchurch (meaning central city area has traditionally been described as the Post-earthquake data (2012) shows businesses tended to be larger) in 2010. area between the four avenues: Rolleston, employment in the central city has The make-up of the central city included Bealey, Moorhouse and Fitzgerald. significantly fallen with the largest falls seen Accommodation, Cafes and Restaurants in Property and Business Services (down Statistics New Zealand produces estimates (39% of Christchurch’s employees in 63 Christchurch Central Recovery Plan 64 74%), Financial and Insurance Services on the number of geographic units, this sector were in the Central City), (down 84%) and Accommodation and Food employees and residents in an area Communication Services (53%), Finance Services (down 79%). roughly equivalent to the central city (it also and Insurance (55%), Property and
2010 Geographic Units and Employees Christchurch
GEOGRAPHIC UNITS EMPLOYEES32 City Centre Christchurch % Centre City Centre Christchurch % Centre
Total Industry 6008 37643 16% 51280 184850 28% Agriculture, Forestry and Fishing 55 1162 5% 36 1650 2%
Manufacturing 188 2272 8% 2005 25260 8%
Construction 106 3678 3% 465 10710 4%
Wholesale Trade 239 2243 11% 1420 12240 12%
Retail Trade 758 4414 17% 4750 23400 20%
Accommodation, Cafes and Restaurants 382 1294 30% 4670 11920 39%
Transport and Storage 109 1306 8% 1235 8910 14%
Communication Services 36 321 11% 1315 2470 53%
Finance and Insurance 706 2476 29% 2480 4470 55%
Property and Business Services 2499 12866 19% 12130 24770 49%
Government Administration and Defence 69 121 57% 3850 5310 73%
Education 127 717 18% 3070 14910 21%
Health and Community Services 289 2109 14% 8760 24560 36%
Cultural and Recreational Services 134 966 14% 1950 5660 34% 36 Personal and Other Services 290 1650 18% 2650 7730 34% Source: Statistics New Zealand
32 Employees does not include working proprietors.
background paper to the christchurch economic development strategy A Prosperous City
ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 60
Central City
The 2006 Census describes the population 4.2 Drivers of Central City Encouraging residential living within the living in the central city area (using the same Competitiveness central city is an important factor of city three area units as the industry statistics growth, efficiency and maintaining a vibrant The competitiveness of central cities is given above). There was a small amount inner city. Traditionally, Christchurch, in derived from close geographic proximity. of residential growth. In 1996 2.2% of line with other New Zealand cities, had Businesses located close to similar Christchurch lived in the inner city, rising a relatively low proportion of its residents businesses enjoy agglomeration advantages to 3.8% (13,827 people) in 2006. There living within the central city area as land of lower transaction costs such as transport is a distinctive bi-modal age distribution of price, distance and time factors were not yet savings, easier access to and development residents: 27% are 20-29 year olds and sufficiently divided between suburban living of common services, benefits from sharing 63 Christchurch Central Recovery20% are Plan over 60. Children and the middle- and inner-city living to drive high-density 64 ideas and in some cases better access to aged are less likely to live in the central city. inner-city development. In Christchurch a skilled staff and customers. central-city high density townhouse and Residents of the central city were more US Inner City 100 (Inner City Renewal, apartment culture had been evolving. City qualified (50.7% have a post-school 200133) looked at inner-city companies in residents were spending around $11,000 qualification, compared to 40.5% across America and found that they had higher per annum (around $30 per day) and 75% Christchurch) and have a marginally higher levels of growth, a high proportion of of non-local employees spent an average of median income. employees in the inner city and an average $10 per day ($2,250 per year). Residents wage rate 170% above the minimum, have a much bigger economic impact on the suggesting more knowledge-intensive retail and hospitality sector within a central activities. The particular sectors that benefit city than employees. Growing the residential the most from CBDs include Business population in the central city will drive inner- Services, Education, Printing, Food, city economic activity and vibrancy. Health Care and Tourism. This mirrors the It is estimated that a tourist spends around business activity that existed in the central $25 per day on food and beverages, and city prior to the earthquakes: accountants, $35 on other retail34. lawyers, property, CPIT & Private Training Establishments, restaurants, cafes, the hospital, tourism activities and hotels. Less prevalent in the US study but present in New Zealand central cities are local and central government functions including Police and Fire services. There are, however, challenges with an inner city. These include the perceptions of crime, actual crime, transport, increasing congestion and parking. 37
33 Inner City Renewal, Professor Michael E. Porter, Harvard Business School, 2001 34 Greg Davis, Takitks, Perth.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 61 4/ Central City
4.3 Central City Plan The core components of the CBD Plan are a In accordance with CERA’s lead role in large memorial park, a business/education recovery, the Government has created and campus zone, a stadium, a metro sports tasked the CCDU with finalising the Central facility, Avon River park, convention centre, City Recovery Plan. The CCDU is charged arts and heritage precincts, and a health with developing and implementing a Central precinct. City Plan and investment proposition that CBDs play a necessary role in cities, being provides confidence, certainty and direction a collection of knowledge-intensive firms to ensure a brisk recovery for the CBD. that derive economic benefit from being The development and investment in very close proximity to each other. The proposition will be based around a new risk for Christchurch is that businesses urban design for Christchurch. The key and households have begun to adapt to principle in design is a central city delivering life without a central city and, should the a more compact core and a stronger degree CBD not re-ignite, over time the costs of of participation led by a new urban frame, dispersion and fragmentation of businesses using anchor projects to create utility and over a spatial footprint that is too big for its stimulate development and using planning population will become apparent. techniques to optimise economic benefits for landowners, investors, developers and businesses.
Christchurch Central Development Unit The anchor projects of the Christchurch Central Recovery Plan (and the expected project duration) include: »»An Earthquake Memorial (2012- 2016) »»Te Puna Ahurea Cultural Centre »»Avon River Precinct (2012-2015) »»The Square (2012-2016) »»The Frame (2012-2014) »»Convention Centre Precinct (2012- 2017) »»Justice and Emergency Services Precinct (2012-2016) »»Retail Precinct (2012-2016) »»Innovation Precinct »»Performing Arts Precinct (2012-2016) »»Central Library (2012-2014) »»Residential Demonstration Project (2012-2014) »»Metro Sports Facility (2012-2016) »»Stadium (2012-2017) »»Cricket Oval (2012-2013) »»Bus Interchange (2012-2014) 38
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 62
dedicated to innovation economic growth quality of life
5/ The Christchurch Economic Development Planning Process
39
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 63
The Christchurch Economic 5/ Development Planning Process
5.1 Introduction to the Process »»Provide an opportunity for stakeholders 5.3 Stakeholder Engagement The last Christchurch Economic to contribute input and feedback An Economic Development Strategy should Development Strategy (CEDS) was »»Present a clear pathway to support an be a shared development process between completed just before the first earthquake economically secure future for the city local government, the private sector and in September 2010. A number of other agencies such as education. The circumstances since then have, and 5.2 Integration with Recovery purpose of engagement is to ensure that will continue to, reshape the economy Planning the themes and views of these stakeholders of Christchurch city which CEDS 2010 inform and shape the development of the was developed for. These circumstances It is vital that economic recovery economic development strategy. include earthquakes, aftershocks, the actions clearly link through to long-term The economic development planning CERA Economic Recovery Plan, the economic development planning. The process uses a stakeholder engagement forming of the CCDU and Central City existing economic priorities and goals for process where groups from the business Plan, a protracted global financial crisis, a Christchurch have been an influence (but and government community bring ideas, rearrangement of business activity and the not the sole determinant) of shorter-term knowledge and experience to the planning opportunity to “do some things differently”. economic recovery priorities and, conversely, opportunities born from recovery activities process and ensure themes, views Local government’s role in economic and need to influence long-term economic and trends are captured. Stakeholder business development complements its role development planning. engagement will are conducted within the in providing a reasonable and affordable context of specialised workshops such as quality of life for residents. Attracting and CDC (along with Environment Canterbury, workforce, infrastructure and innovation. retaining businesses and people in a city Christchurch City, Selwyn and Waimakariri The workshop sessions are complemented relies on many factors, not least of which Councils) has been involved in the with the Background Paper other relevant includes the prosperity of the economy development of CERA’s Recovery Strategy. information. and availability of good jobs. Economic CDC has been a standing member of The first phase of the current CEDS development planning ensures that the Partnership for Economic Prosperity revision involves workshops and meetings. business, resources and investment are and Recovery (PEPR) Stakeholder Group The second phase is the preparation of a steered towards a common set of objectives and also had secondment roles in to draft document for key stakeholder review that will improve economic outcomes. the CERA infrastructure, the economic recovery project team, workforce recovery and the final phase is publishing and CDC has delegated authority from planning and working with the CCDU. As releasing the completed CEDS with the Christchurch City Council (CCC) to prepare, short term economic recovery planning Background Paper. implement and review the Economic shifts out of the planning phase and in to Development Plan for the city. implementation, the platform exists for the The key aims of an economic business community to explore economic development planning process are: development and growth. This is the current CEDS review process, building on »»To draw appropriately from previous recovery with development and growth 40 stakeholder engagement and data planning towards 2031. collection processes CERA is considered a key stakeholder in the »»Ensure a clear link between local development of the CEDS. economic development planning and the central government growth agenda
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 64
dedicated to innovation economic growth quality of life
6/ Where we want to be
41
background paper to the christchurch economic development strategy A Prosperous City
ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 65 6/
Post-Earthquake Christchurch has several opportunities for significant growth in its future as well as challenges to keep the city competitive.
Canterbury’s GDP is projected Population Canterbury GDP Projections by CDC to grow at around 2.3% The baseline projections for 28000 (Christchurch 1.9%) per annum in the population of Christchurch the post-rebuild period. is growth of around 0.7% per 24000 In the GDP projections below, the annum. If the city is unsuccessful 20000 ‘green band’ shows growth based in maintaining competitiveness this could fall to only 0.2% per on historical data, including the 16000 ‘must-do’ rebuild activities (the annum. The city could see strong population growth if the rebuild is dotted line excludes the rebuild, 12000 successful in creating a vibrant, $m, 95/96 showing the underlying growth). 63 Christchurch Central Recovery Plan 64 world-class city. Based on US 8000 The ‘red band’ represents what examples of well- performing Actual (estimated) Baseline (no rebuild) could happen if there are poor cities, the population growth rate 4000 Baseline Declining Economy investment decisions and a mis- could increase by 0.1 percentage Upper Band directed allocation of resources. points each year. This could result 0 This modelling is based on an in a city population of 444,000 in 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 analysis of similar-sized US cities. 2031, up from a baseline growth Source: CDC, Infometrics, Statistics NZ, Market Economics A declining economy situation projection of 402,000. is characterised by conditions such as business flight from the Population growth above the It is important to note the relationship baseline will contribute to GDP region, a decreasing working age between GDP and population growth. population (especially 15-45 year growth. It is important to ensure range), growing unemployment that within the working age One can influence the other positively and investment flight (refer to the population, the region continues or negatively. methodology appendix for further to monitor the age, education information). demographic and the alignment between workforce skills and Christchurch Population Projections The upper (purple) band provides growth sectors such as ICT, 460,000 a potential GDP outcome if the Health, High Value-Added region executes ‘step change’ Manufacturing and Agriculture. 440,000 activities well. The upper band 420,000 represents strong success in CDC’s approach has been to identify factors that can step- GDP ‘step change’ activities, 400,000 leading to strong attraction and change baseline GDP growth retention of people in the greater forecasts, and factors that 380,000 Christchurch area. By 2031, the are necessary to keep a city 360,000 difference between the baseline competitive and meet its baseline and the upper band projection is growth forecast. 340,000 around $3,760 million ($95/96, Actual (estimated) Decline 320,000 42 or 18%) above the baseline if Baseline Attractive City GDP ‘step change’ activities are 300,000 executed well. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Source: CDC, Infometrics, Statistics NZ, Market Economics
background paper to the christchurch economic development strategy A Prosperous City
ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 66
Where we want to be
Step Change growth and the city’s population could be 10% above baseline growth projections. Representation of City Economic Goals The factors that are likely to step change the Christchurch and Canterbury economies GDP and population graphs have been include: developed outlining scenarios that Keeps us Competitive graphically and numerically represent »»Maximising earthquake recovery Cities, much like organisations, need to potential growth paths for Christchurch opportunities: Earthquake recovery find ways of continuously improving their and Canterbury. The methodologies for spending on new infrastructure, facilities operating environment to remain competitive calculating each of these projections is and buildings is mostly in the local and/or create periods of competitive given in an appendix to the Background economy advantage over other cities. 63 ChristchurchPaper. Central TheyRecovery include: Plan 64 »»Effective water resource management: Keeping the city competitive will keep it on its Increasing irrigation potential and projected baseline growth path. Large step Baseline A baseline projection using productivity in the Canterbury Plains changes in GDP are unlikely to result from historical growth rates which includes while managing water quality these activities. the ‘must do’ components of the rebuild (green) »»Improving productivity through innovation: Businesses using new ideas, the These areas are: Upper Band An upper band which latest technology, new buildings and delivers the baseline plus strong success at modern working techniques to improve Workforce productivity and develop a competitive ‘step change’ (purple) Making it easier to do business edge Declining Economy A regression line »»Successful central city design and build: Infrastructure which shows a scenario where the ‘keeps Creating a culturally attractive and vibrant Supporting Innovation us competitive’ projects fail and the city city centre that attracts new businesses and region sees regression (red) and people, and improving productivity in Connections and Business Networks a more condensed CBD »»Increased exports and improved Investment Vehicles distribution networks: Meeting the Sector Development Government’s China export growth targets These factors, if done well, can move the Business Development economy off the projected baseline growth Failing to continually improve economic path and may result in above average growth conditions and maintain a healthy, success in the attraction of migrants and competitive city could result in a declining retention of residents, which will further growth rate. strengthen economic growth. The previous GDP and population graphs show that if Christchurch is successful in its rebuild; becomes an innovative city; drives 43 global distribution; attracts people; and irrigation is successfully implemented in the Canterbury region, GDP could sit between 4% and 18% above projected baseline
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 67 ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 68
dedicated to innovation economic growth quality of life
Appendices
Appendix One: Sector Profiles p46 Appendix Two: Market Profile - China p61 Appendix Three: Risk Profiles p62 Appendix Four: Canterbury Development Economic Models p63 Appendix Five: Innovation Cities Analysis p65 Appendix Six: Methodology for GDP Projections p66 Appendix Seven: Methodology for Population Projections p71 Appendix Eight: Glossary p73 Appendix Nine: Bibliography p74
45
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 69 APPENDIX ONE: SECTOR PROFILES
Appendix One: Sector profiles
This section looks at some of the key sectors driving the local economy and presents some characteristics on each. This is based on the output of two models utilised by CDC, as well as additional information to reflect the situation post-earthquakes. The sectors listed below represent two-thirds of the Christchurch economy.35 They were chosen for their size, distinctiveness in Christchurch and their ability to grow the economy through increased outputs or enabling increased outputs in other sectors.
»»1 Logistics »»2 Professional and Financial Services »»3 Agribusiness »»4 High Value Added Manufacturing »»5 Tertiary Education »»6 Technology »»7 Health »»8 Retail Trade »»9 Government »»10 Tourism »»11 Mining »»12 Construction 46 »»13 General Manufacturing
35 The remaining third includes supporting sectors such as Electricity, Gas, Water and Waste Services; Wholesale Trade; Rental Hiring and Real Estate Services; Administrative and Support Services; Other Services and Unallocated.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 70 APPENDIX ONE: SECTOR PROFILES
01 Logistics
The Logistics sector supports the local Sector Trends Demographics economy and provides an essential service Larger vehicles Changes in population have a correlating to export industries by enabling the efficient impact on consumption and the demand Internationally, shipping companies are movement of goods to external markets. for goods at the household level. This has continually moving to larger vessels. The In line with the logistics sector’s support, an impact on the volume of imported goods rail network has been upgraded on some support player role in the economy, activity and local distribution requirements. The key routes to enable the operation of has historically been closely linked to wider long term trend in Christchurch has been longer trains. The Government has recently economic performance. a growing population. This is expected amended land transport rules to enable the to continue despite a slight reduction Quick facts use of high productivity vehicles, up to 20 in population following the Canterbury metres in length, to operate above 44 tonnes »»Contributes an estimated $690 million to earthquakes of 2010 and 2011. Christchurch GDP (Infometrics’ Estimate on specified road routes. annual average 2010/2011, current Sector Projects prices, ‘Transport and Storage’) Port expansion and consolidation Roads of National Significance Internationally, the size of goods ships is »»Accounts for around 5% of GDP in The Christchurch Roads of National Christchurch increasing in order to improve efficiency in supply chains. In light of this trend, Significance projects will improve key »»Around 1,300 related business units are the New Zealand Shippers’ Council has sections of three State Highway corridors based in Christchurch (2011, Statistics recommended that two ports (one in the that provide critical routes to Christchurch New Zealand) North Island and one in the South Island) International Airport (SH1), in to central 38 Christchurch and to the Port of Lyttelton »»Has around 8,900 employees (2011, should invest to become 7000 TEU ship (SH74 and SH73). Statistics New Zealand) capable within the next five years. The analysis and research they have undertaken Demand in the logistics sector is points to the ports of Tauranga and Lyttelton Rail largely driven by the performance of being the logical candidates to deliver KiwiRail’s 10-year turnaround programme of the following sectors: such capability. If larger ships start to serve investment in the rail network’s financially, Lyttelton it is likely that some consolidation of financially productive assets is designed to »»Agriculture and Food Processing international goods trade would occur in the create a sustainable rail business capable of »»General Manufacturing South Island. operating without subsidy. »»High Value-Added Manufacturing Rebuild Port of Lyttelton »»Mining The Christchurch rebuild will require Land is being reclaimed at Lyttelton Port »»Retail the movement of a significant volume of utilising earthquake deconstruction waste. »»Construction deconstruction and construction materials. The Port’s long-term strategy is to shift This provides an opportunity for the logistics its port facilities to the east. Lyttelton Port Over the period to 2031 the logistics task sector to grow, which in turn will enable Company is also planning for the ability to in New Zealand is expected to increase by innovation and reinvestment to ensure on- accommodate larger ships. about 70-75% compared to 2006 volumes. going efficiency gains throughout the supply Growth in Canterbury is expected to be chain. The sector should benefit throughout Christchurch International Airport above the national average.36 The Logistics the rebuild period. Redevelopment sector in Christchurch has, and will continue The repair of infrastructure and relocation of Christchurch International Airport has been to, experience changes in demand as businesses also provides some opportunities undertaking major developments. Stage a result of the Canterbury earthquakes. to improve transport networks to support one of the terminal development has been Unlike most sectors, the net impact of greater efficiency in the logistics sector over completed. Stage two will be completed by the earthquakes on employment levels the long term. early 2013. in the logistics sector has been positive.37 Significant resources will be required on an Rural Hinterland on-going basis to support demolition, repair and rebuild activities. Agriculture is a key driver in the growth of activity in the city’s logistics sector. The logistics sector is a key service sector enabling the delivery of primary produce to national and international markets. Increases in agricultural productivity, through irrigation for example, has a direct impact on demand 47 for logistics sector services.
36 National Freight Demands Study, Richard Paling Consulting for Ministry of Transport, New Zealand Transport Agency & Ministry of Economic Development, 2008. 37 A Changing Landscape: The Impact of the Earthquakes on Christchurch Workplaces, Department of Labour, 2011. 38 TEU stands for ‘twenty-foot equivalent unit’. This is a standard measure of container volume.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 71 APPENDIX ONE: SECTOR PROFILES
02 Professional and Financial Services
The Professional and Financial Services sector Sector Trends Rural Hinterland is considered a key driver of the local economy. Exporting of services Agriculture is a key driver of the city’s The global recession and earthquakes resulted service sector. The Business and Financial in a small contraction in GDP after 2007. This With technology reducing barriers to Services sector is both a beneficiary and was not a surprise. However, the industry has doing business internationally this sector enabler in assisting the development of seen a significant GDP growth of over 35% is exporting its services. At present we water resources and commercialisation over the past 10 years. cannot capture the value of this activity, but of intellectual property that will assist in anecdotally we are aware of a number of This sector is estimated to have the second generating revenue and productivity in the businesses exporting architectural, financial, sector. highest level of productivity and is supported management, engineering and scientific by the highest qualification level of workers. services offshore. Sector Projects Clustering Quick facts Capital Cluster Following the earthquakes many businesses »»Contributes an estimated $1.90 billion to The Capital Cluster is a group of professional Christchurch GDP (Infometrics’ Estimate were displaced from the CBD and have had to relocate to the suburbs. This has service advisors and capital providers. Its annual average 2010/2011, extrapolated purpose is to provide independent advice to from 95/96 prices, “Finance and added challenges to the sector as it reduces the collaboration between businesses and businesses to assist them in building resilient Insurance; Professional, Scientific and investment cases to obtain capital (both debt Technical Services”) disciplines that was characterised by their presence in the CBD. Early indications are and equity) on the most favourable terms. »»Accounts for around 13% of GDP in that these businesses will be anchor tenants This is achieved by preparing investment Christchurch in the redeveloped CBD. With the CBD being cases that will be recognised favourably by capital markets. »»Around 6,000 business units are based much smaller and the increased need to in Christchurch (2011, Statistics co-operate on rebuild projects, this will result New Zealand) in a more connected sector. »»Has around 14,500 employees (2011, Rebuild Statistics New Zealand) The Christchurch rebuild provides an The services sector was particularly impacted opportunity for this sector to attract talented by the earthquakes, with many professional professionals into the city. Due to the services businesses located within the magnitude of the rebuild there will be a need central city area. Many of these businesses for a highly-skilled workforce of engineers, were highly mobile and able to re-establish architects, lawyers, accountants, finance/ themselves reasonably quickly, although investment and employment specialists. This sometimes in less than ideal conditions. The will result in the up-skilling of local talent Department of Labour Earthquake Survey and the attraction of new talent in to the city. estimated that 49% of Professional, Scientific Many of the businesses will be involved in and Technical Services sectors saw an projects that will significantly increase their earthquake-related fall in revenue. The sector, capacity to compete for offshore work. The however, has not seen a significant reduction sector should benefit from the rebuild for the in employment since the earthquakes; A next 10 years. total of 2.8% more people were employed in Professional, Scientific, Technical, Administrative and Support Services in December 2011 compared to December 2010 (Household Labour Force Survey).
Professional and Financial Services Sector Employment Breakdown, 2011
Legal and Accounting Services 20%
Architectural, Engineering and Technical Services 22%
Management and Related Consulting Services 17% 48 Finance 13% Auxiliary Finance and Insurance Services 8%
Insurance and Super Funds 8%
Scientific Research Services 4%
Source: Statistics New Zealand
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 72 APPENDIX ONE: SECTOR PROFILES
03 Agribusiness
Canterbury is a world-renowned food »»The proposed Emissions Trading Scheme Export Growth Markets growing region, producing among and its impact on farm practices, The current growth markets for New Zealand other things meat products, seafood, production costs and in the development primary products are in South East Asia, dairy foods and wine for domestic of new technologies China and South America. consumption and export. Non-food products are also important such as Adding Value Workforce Issues seeds and forage crops. Christchurch There is potential for more of the raw plays a key role in adding value to product grown and produced in Canterbury The agriculture sector has recognised that products grown in the region, as to be turned in to value-added products. there are challenges in the attraction and demonstrated by innovative companies There are a number of businesses who retention of people. These challenges are such as ANZCO Foods, Original Foods, have developed their business around across all levels, from farm staff and farm PGG Wrightson, Serra Natural Foods and selling value added product, some of these managers to the agricultural sciences and United Fisheries. businesses only sell their products within related disciplines. The level of on-farm New Zealand and could potentially expand technology deployment and management Canterbury is a hub for agribusiness in to selected export markets. is a recognised productivity constraint and research and agritech innovations, a barrier to the further adoption of new Challenges to adding value and further undertaken by the private sector and by technologies. globally-recognised research institutes such market development: as Lincoln University, Landcare Research, Plant and Food Research and AgResearch. »»Costly and resource-intensive Corporate Farming »»Intense competition There is a gradual shift away from the traditional family and generational business Quick facts »»A greater need for more collaboration to model to one of corporate farming and family »»Contributes an estimated $730 million to develop additional market opportunities equity models, where economies of scale are Christchurch GDP (Infometrics’ Estimate »»Power is consolidated in a smaller used to reduce marginal costs and improve annual average 2010/2011, current number of large retailers both nationally efficiency and margins. prices) (larger in Canterbury) and internationally »»Accounts for around 5% of GDP in »»Servicing independent retailers can The Rise of Dairy Christchurch require dealing with a large number of There is an increase in land-use »»Around 1,400 business units are based individual stores conversions from sheep, beef and grain in Christchurch (2011, Statistics New »»Small food manufacturers can only farming to higher-value and process- Zealand) service relatively small-sized markets e.g. driven dairy farming. This shift is seeing dairy farming development in areas that »»Has around 6,900 employees (2011, a state in the US or a group of retailers in have not traditionally been farmed as Statistics New Zealand) a region dairy, with the subsequent developments »»The need to create new products for of implementing sophisticated water and changing customer preferences and effluent management solutions to alleviate lifestyles Sector Trends any environmental issues . »»New Zealand products are priced at the Central Government premium end of the market Issues and Opportunities Central government policy and regulation »»Shelf life is a constraint for exporting a The 2009 Business Survey identified several plays a large role in shaping the Agriculture number of different types of foods constraints and opportunities in this sector. business sector. The following policies are Common constraints included funding and either under discussion or operational and investment and the recession/economic are intended to improve efficiency and climate and its impact on customers and maintain competitiveness: sales. Water management »» Objectives for sector businesses included »»Financially supporting research and growing in to new markets, increasing development in the Agriculture sector profitability and developing new products. and the uptake of technologies in primary land-based production systems »»Free Trade Agreements to increase market access »»Ensuring robust biosecurity systems to 49 protect New Zealand’s food exports and its ‘clean green’ image and reputation as a point of difference
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 73 APPENDIX ONE: SECTOR PROFILES
03 Agribusiness [cont.]
Sector Projects PA technologies and systems. Managing Canterbury’s Water NZ Food Innovation South Island Water is a critical resource for Canterbury CDC has established a subsidiary company, in terms of recreation, environmental NZ Food innovation South Island Ltd, to sustainability and economic development. provide specialised business growth advice, Canterbury has the largest area of irrigated market entry and pilot production facilities land in New Zealand and there is the for innovative food companies. NZ Food potential to expand this further. Economic Innovation South Island Ltd is part of a modelling of proposed irrigation schemes nationwide initiative that aims to establish in Canterbury indicate that if these were to facilities for companies to conduct product come to fruition there is the potential for development, testing and evaluation at a approximately $1.1 billion in extra value- local level. added to be generated in the region (The Economic Value of Potential Irrigation in Templeton Agri-innovation Park Canterbury, AERU). CDC is working with local government, To ensure a cohesive and consistent Crown and Research institutes and private approach to the management of this investors to help facilitate organisations resource Environment Canterbury is leading who would be suitable to locate in the the Canterbury Water Management Strategy, Templeton Agri-Innovation Park on the working in conjunction with economic outskirts of Christchurch. This facility seeks development agencies and local councils. to house agri-focused ICT and specialist CDC’s role is to consider the economic manufacturing companies and research impact of land-use production changes and development activities. It will leverage arising from irrigation projects, the flow- off the research capabilities of Lincoln on effects to supporting sectors and the University and rural-focussed research infrastructure requirements they may create institutes, all of which are located in close in regard to the movement of products. proximity to the park. Its primary goal will be to encourage collaboration and facilitate Precision Agriculture Development and enable research and development, Precision Agriculture (PA) is a land- technology and knowledge transfer, management concept based on observation commercialisation and training and people and response to variability in land and development across the sector. primary production systems. It relies on new technologies such as electronic identification, GPS, information technology, geospatial and bio-response tools, and enables producers to optimise land and primary-production management by acting on the variability measured using these types of technologies. Those responses can be quantitative, qualitative, address sustainability and provide benefits to producers, consumers and the environment. CDC is one of the partners in the establishment of New Zealand’s first dedicated Precision Agriculture organisation, Precision Agriculture NZ Inc. The primary role of this group is to enable land users to be more productive, efficient and sustainable-and therefore competitive-by providing a platform for information sharing, networking, investment and innovation in the 50 development and implementation of relevant
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 74 APPENDIX ONE: SECTOR PROFILES
04 High Value-Added Manufacturing
Canterbury is the second-largest Sector Trends Sector Projects manufacturing centre in New Zealand. It is headquarters to iconic New Zealand Investment in equipment and machinery Productivity and performance companies such as Hamilton Jet, Tait Through the introduction of new and improvement Communications, Skope and Skellerup. sophisticated technologies, such as robotics, CDC is co-ordinating a range of initiatives Christchurch is also home to global multi-axis Computer Numerical Control to drive productivity improvements in the blue-chip multi-nationals such as Pratt & (CNC) Machines, and UFB, companies sector, including funding and access to Whitney, Schneider, Tyco, Eaton and Hewlett can compete globally by improving quality, Lean (systemic business improvement), staff Packard. These are in turn supported by a productivity and reducing labour costs. training (competitive manufacturing training) sophisticated supply chain of local original and staff loyalty programmes. equipment manufacturers (OEMs) that Greater flexibility and scalability include light and heavy engineering, plastics, The adoption of flexible manufacturing Workforce development rubber and composite materials companies systems providing scalability from proto- To address manufacturers’ growing supplying sub-assemblies, components and typing and small batch runs to modest workforce needs, CDC is developing a parts to a diverse range of industrial markets. production runs to respond quickly to manufacturing workforce plan to lift the Collectively, the sector supplies a broad customer needs and market changes while sector’s profile. This will provide better range of national and international still controlling costs and quality. linkages with Government agencies markets that includes: and training organisations to deliver »»Food processing Skills shortage programmes to both attract staff (from »»Marine Access to a skilled workforce is one school programmes and career clustering to »»Communications of the key requirements for growth for offshore recruitment) and retain staff (such »»Commercial refrigeration manufacturers. They face challenges to as staff training, secondment and loyalty »»Agriculture retain their workforce because of the social programmes). »»Mass transport impacts of the earthquakes, increased »»Medical devices global labour mobility and migration loss to New product development »»Infrastructure Australia. CDC is providing linkages with public »»Defence research organisations (PROs) to support »»Domestic & commercial electrical Competition from low-cost manufacturers’ new product development. »»Power management Asian economies »»General consumer manfacturing Like many manufacturers globally, Business development Christchurch manufacturers face increasing CDC and the Industry Capability Network Quick facts pricing competition from low-cost, long-run (ICN) has developed a Local Industry »»Contributes approximately $850 Asian manufacturers, as a strong New Zealand Participation Programme. The aim is to million to Christchurch GDP dollar exchange rate accelerates import maximise the number of local workers (Infometrics’ Estimate annual penetration of manufactured goods in to the employed in the rebuild by ensuring average 2010/2011, current prices) domestic market. that local and domestic companies are fully represented and integrated in to the »»Accounts for around 6% of GDP procurement processes of the major project in Christchurch management offices (PMOs). A longer-term »»Around 1,000 business units are objective is to grow the long-term capacity based in Christchurch (2011, and capability of local companies supplying Statistics New Zealand) the construction sector and to develop legacy opportunities as companies develop »»Has around 10,700 employees long-term competitive advantage from (2011, Statistics New Zealand) resilient products and technologies. A related CDC/ICN initiative is representing High Value Added Manufacturing Sector Employment Breakdown, 2011 and profiling the capabilities of the local OEM sector to senior procurement managers Polymer Product and Rubber Product Manufacturing 15% in the Australian transport industry.
Fabricated Metal Product Manufacturing 24% Irrigation schemes
Transport Equipment Manufacturing 23% Two major irrigation schemes – Hurunui irrigation and hydro scheme and Hunter Electrical Equipment Manufacturing 9% Downs irrigation scheme – are likely to have 51 a significant impact on high value-added Other Machinery and Equipment Manufacturing 9% manufacturing in the city, by drawing on its resources and skilled workers. Basic Chemical and Chemical Product Manufacturing 7%
Source: Statistics New Zealand
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 75 APPENDIX ONE: SECTOR PROFILES
05 Tertiary Education
The greater Christchurch tertiary sector Sector Trends Sector Projects consists of two universities (University of Canterbury and Lincoln University); one Diversified Revenue Streams Christchurch Educated Institute of Technology and Polytechnic; The current funding model of mixed Christchurch Educated is a collaboration Private Training Establishments (PTEs); Tertiary Education Commission Student of universities, CPIT, PTE’s and schools Industry Training Organisations (ITOs) and Achievement Component funding and to grow international student recruitment community training programmes; as well as controlled fees structure for domestic through sharing resources and joint offshore the University of Otago Christchurch School students is insufficient to fund delivery projects. Currently Christchurch Educated of Medicine. University of Canterbury is and depreciation (renewals) for most is the distribution vehicle for funding from recognised for its research and programmes tertiary sector operators. This structure is Education New Zealand to help rebuild the in Engineering and the Sciences, and encouraging commercial revenue growth region’s international student numbers. Lincoln University for Land Based Research. such as growth in international students, research unit commercial consulting and The three largest institutions – University investment in commercialisation. of Canterbury, Lincoln and CPIT – bring approximately $200 million of funding Accessibility and Flexibility annually for domestic student education, over $30 million in performance-based More and more students are working, research funding and approximately caring for children or have other major $50 million in international student revenue. commitments while studying. Attracting students both domestically and internationally is partly influenced by how Quick Facts studying fits in with their lifestyle. More »»Contributes approximately $670 million courses are being offered part or, in some to Christchurch GDP (Infometrics’ cases, totally online. Courses (particularly Estimate annual average 2010/2011, degree study) are becoming shorter so current prices, “Education”) people can complete them in less time. »»Accounts for around 5% of GDP in Christchurch (entire education sector) Education to Workplace Pathways Central government policy focused on Tertiary education has around 80 »» building pathways from high school in to business units based in Christchurch tertiary education or work, and tertiary in to (2011, Statistics work is encouraging stronger alignment and New Zealand) co-operation between high schools, tertiary »»Tertiary education has around 4,400 providers and the business community. employees (2011, Statistics New Zealand) Issues and Opportunities The 2009 Business Survey identified several constraints and opportunities in the education sector. The main constraint at that time was the economic recession. Business objectives included growing in to new markets and increasing profitability.
52
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 76 APPENDIX ONE: SECTOR PROFILES
06 Technology
Christchurch is New Zealand’s second Sector Trends Sector Projects largest region for technology businesses and boasts some of Australasia’s most innovative Export Focus Workforce Strategy Planning and successful software, hardware and Increasingly Christchurch’s technology A sector workforce plan has been developed electronics companies. These include a companies are generating export revenue to help businesses alleviate future workforce combination of local firms such as Jade for the region. Many businesses are focusing pressures and to ensure that training Software, Tait Communications and SLI on market expansion to Australia, the USA programmes are designed to meet the future Systems, plus globally head-quartered multi- and Asia. The growth of Christchurch based needs of the industry. nationals such as Hewlett Packard, Allied research and development centres for larger Telesis and Sungard. Supporting these larger foreign owned multi-nationals is also growing Innovation Precinct and companies is a significant group of smaller, as organisations take advantage of a high associated Campus niche businesses. These businesses foster performing, lower cost labour in the region. The creation of a central-city innovation an industry culture of entrepreneurship precinct, along with other industry projects and innovation, with products such as the Growth of Mobile such as the Tait Communication Campus Yike Bike and The Martin Jetpack being Following global trends, Christchurch’s and the Templeton Agri-Tech Park, are developed within the city. technology sector is moving its focus projects aiming to foster growth through Collectively the technology sector creates towards the development of mobile collaboration and sharing amongst industry a broad range of technology solutions application development and associated web sub-sectors. and services for multiple local and off- technologies. shore markets. Many of the companies Productivity Drivers within Christchurch’s technology sector Clustering Increasing the use of productivity drivers have specific synergies with other sectors Technology is a knowledge intensive such as the introduction of Scrum (agile) including high value-added Manufacturing, sector and Christchurch businesses are project management methodologies in to Agriculture, Education, Medical and increasingly finding advantages from being business and the development of sound Logistics. Specific markets for Christchurch’s located in close proximity to other similar governance practices within the sector to ICT companies include: businesses and complementary services. improve productivity. Location advantages include knowledge, »»Medical and medical devices information and opportunity sharing that Ultra-Fast Broadband(UFB) »»Agri-tech accelerates overall capability and business Increasing the uptake of UFB within the »»Telecommunications growth. Currently these include the Software technology sector will assist local businesses cluster, Health ICT cluster, Electronics South to increase productivity and potentially open »»Networking cluster and the new Enterprise Precinct and up new and innovative business processes »»Augmented reality Innovation Campus (EPIC). and opportunities. »»HR Skills Shortage Digital Leaders Group »»Aerospace Increasingly the Technology sector is This project group will initially support »»Mobile Applications highlighting difficulties in recruiting in to business engagement with the ultra-fast »»Accounting and procurement specialised technology-based roles, in broadband (UFB) roll-out. It is expected particular programmers and developers. Large that this group will continue to develop »»On-line and web-based services employers in particular are starting to look a greater Christchurch Digital Strategy »»GPS and location services offshore for specialist skills, resulting in a larger and oversee technology related projects skilled migrant workforce. that have macro-economic benefit for the Quick facts region. The Group currently comprises CDC, Enterprise North Canterbury, Enable »»Contributes approximately $880 Networks and CERA. million to Christchurch GDP (Infometrics’ Estimate annual average 2010/2011, extrapolated from 95/96 prices, “Information Media and Telecommunications”) »»Accounts for around 6% of GDP in Christchurch »»Around 870 business units are based in Christchurch 53 (2011, Statistics New Zealand) »»Has around 6,000 employees (2011, Statistics New Zealand)
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 77 APPENDIX ONE: SECTOR PROFILES
07 Health
Christchurch is the leading Health hub Sector Trends Sector Projects for the South Island, providing a full range of medical services. The Health sector Changing Demand Health Hub includes medical and social services such The nature of demand for health services is CDC is contributing $1 million over five years as counselling, and tertiary care such as being impacted by two key factors. The first to the development and commercialisation cancer management. is the changing diversity of New Zealand’s of medical research and development in population and the cultural and medical the health sector, in partnership with the The Health sector’s contribution, contribution needs that are culture specific. The second Canterbury DHB. The Health Hub is part of to the region’s economy is significant as an is the ageing population trend, and the a national network. employer, but also in terms of its investment expectation that health services will need to in education and medical research and be increasingly geared towards the aged. Health Precinct development, and its attraction of highly- The health system also operates differently qualified people. A Health Precinct is being developed within Canterbury, with more treatment to cluster medical research, services, carried out in community settings and less training and commercialisation functions Quick Facts: in hospitals. near Christchurch Hospital. The Precinct »»Contributes approximately $1.33 billion to is likely to be a key part of the CBD Christchurch GDP (Infometrics’ Estimate Technology and Medicine Interface redevelopment and be an anchor tenant of annual average 2010/2011, current The New Zealand Health sector is the zoned campus area. The Government prices, “Health and Communication evolving in to medical research and has given approval for a major overhaul of Services”) development, commercialisation and Christchurch and Burwood Hospitals, which using new technologies to improve is expected to cost more than half a billion »»Accounts for around 9% of GDP in information systems, service quality and dollars. It will be the largest hospital build in Christchurch reduce costs of production (e.g. integrating New Zealand. »»Around 1,600 business units are based medical records between service providers, in Christchurch (2011, Health only, the use of simulation and internet Health Workforce Planning StatsNZ) technology in training). The DHB has conducted a workforce »»Has around 15,800 employees (2011, planning process to understand the future Health only, StatsNZ) health workforce needs and enable more informed planning to ensure a strong alignment between skills and behaviours needs and the demands of the future health sector work environment.
54
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 78 APPENDIX ONE: SECTOR PROFILES
08 Retail
The Retail sector is one of the biggest Sector Trends Sector Projects employers in Christchurch city, employing 20,000 people. The sector responds to Changing geography of retailers Developing Suburban Centres economic growth, as opposed to driving Traditionally much retail activity has been The economic development of suburban it, and has seen some retraction in recent based around the centre of the city. In centres and townships is a project in the years as a result of the economic recession Christchurch an increase in the number and CERA Economic Recovery Plan (ERP) being and the earthquakes. The Retail sector is size of suburban malls and big box retail led by Christchurch City, Waimakariri District sometimes useful to evaluate the success has drawn business and retail activity away and Selwyn District Councils. Recovery of an economy as people generally reflect from the city. While the central city retains Canterbury provides support to suburban an increase in disposable income and/or the large department store, Ballantynes, centres such as Sumner and Edgeware to confidence through spending. most employees are based in the suburbs, rebuild themselves as retail areas. including one of the seven major malls Ballantynes is the city’s long-standing (Westfield Riccarton, Northlands, The CCDU department store. Large mall complexes Palms, Eastgate, Hornby, Barrington and the are based in Riccarton, Papanui, Shirley, The Central City Development Unit is an Bush Inn Centre) and the big box retailers arm of CERA charged with developing a Linwood, Hornby, Spreydon and Upper such as Tower Junction and Northwood. Riccarton. blueprint and investment proposition for re-establishing the Christchurch central Rebuild city This project involves the location Quick Facts: The earthquakes pushed retail businesses of city Anchor Projects, land zoning »»Contributes approximately $980 million to out of the central city. Many businesses and land acquisition to kick start the Christchurch GDP (Infometrics’ Estimate successfully re-established in the suburbs development process. It provides the annual average 2010/2011, and some closed. The re:START container opportunity to present Christchurch as a current prices) mall in Cashel Street has started the process tourist retail destination through high-end of re-establishing the central city as a retail and boutique shopping to promote tourist »»Accounts for around 7% of GDP destination. As the rebuild continues this spend in the city. in Christchurch mall should expand and new buildings »»Around 3,000 business units are based should provide new opportunities for in Christchurch (2011, Statistics retailers. New Zealand) »»Has around 20,000 employees Internet (2011, Statistics New Zealand) A global trend in the retail sector has been an increase in online retailing. In The breakdown in employment is Christchurch following the earthquakes a given in the table below. number of retailers developed an online presence when physical locations were Over the past decade the sectors which problematic. This has opened new markets have experienced the most growth (in for Christchurch retailers and now has the employees)are Clothing, Footwear and potential to be a niche growth sector for Personal Accessories (employees up 56%), Christchurch. Electrical and Electronic Goods Retailing (up 55%) and Specialised Food Retailing (up 28%). Some components have experienced a decline in employees, such as Non-Store Retailing and Retail Commission Based Buying and/or selling (down 44%) and fuel retailing (down 39% possibly because of self-service options).
Retail Sector Employee breakdown 2011 Supermarket and Grocery Stores 25%
Clothing, Footwear and Personal Accessories 15%
Pharmaceutical and Other Store-Based retailing 12%
Department Stores 9% Hardware, Building and Garden Supplies 8% 55 Motor Vehicle and Motor Vehicle Parts retailing 7%
Specialised Food Retailing 7%
Other 18%
Source: Statistics New Zealand
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 79 APPENDIX ONE: SECTOR PROFILES
09 Government
The Government sector, covering public Sector Trends Sector Projects administration and safety, is a significant employer of skilled workers within Earthquake Ministry of Business, Christchurch city. While this sector does not The earthquake boosted the number of Innovation and Employment (MBIE) drive growth, it is important in providing a people employed in sectors servicing Ministry of Economic Development, well-functioning business environment. the immediate recovery, including civil Ministry of Science and Innovation and defence. The creation of the Canterbury Department of Building and Housing has Earthquake Recovery Authority (CERA) to been merged to create what is described as Quick facts guide the city through the recovery period a ‘super ministry’, the Ministry of Business, »»Contributes approximately $570 million to has boosted employment in the sector, Innovation and Employment (MBIE). Christchurch GDP (Infometrics’ Estimate bringing in skilled workers from around the annual average 2010/2011, current country on secondment. prices, “Government Administration and Defence”) Many government workers were required to vacate their central-city premises following »»Accounts for around 4% of GDP in the earthquakes. Christchurch It is expected that government Around 300 business units are based in »» departments will be key anchor tenants Christchurch (2011, Statistics and help drive the re-establishment of New Zealand) businesses and other organisations in »»Has around 7,600 employees (2011, the CBD. Statistics New Zealand) Public Administration and Sector Employee Breakdown 2011 The breakdown in employment is Central Government Administration 30% given in the table to the right. Local Government Administration 19% Central Government’s significant Police Services 14% presence in Christchurch includes Investigation and Security Services 13% Accident Compensation Corporation, Correctional and Detention Services 11% Inland Revenue Department, Housing New Zealand Corporation, Source: Statistics New Zealand New Zealand Transport Agency, Ministry of Social Development (Work and Income), the Ministry of Education, Immigration New Zealand, Department of Labour, Statistics New Zealand, Department of Conservation, Land Information New Zealand and now the Canterbury Earthquake Recovery Authority (CERA), as well as Crown Research Institutes.
The New Zealand Army has a base at Burnham. The Christchurch City Council (CCC) is a major employer within the city. The majority of Council employees are based in its Central City building. In the original CEDS modelling, the government sector was found to have strong flow-ons to other sectors. The sector also was highly qualified, with an estimated 57% of employees having a tertiary qualification. This leads to the estimated relatively high 56 productivity of the sector.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 80 APPENDIX ONE: SECTOR PROFILES
10 Tourism
Tourism is an important export income earner Sector Trends hindered by the global recession, which for Christchurch. The city has traditionally reduced people’s disposable income. Some been seen as the gateway for tourism in the Earthquake economies are, however, still developing well South Island. The city’s international airport The earthquakes have had a significant and Christchurch should see an increase is second only to Auckland in terms of impact on the Tourism sector. This was in visitors in future. Tourists are likely to international arrivals and departures. through both the significant destruction of come from China, India, South Korea and the central city, where most of the hotels Australia. Australia has been a strong growth Quick facts were located, and through perceived market over the last decade, with many »»Accommodation, Cafes and Restaurants concerns around safety and the loss of Australian visitors making repeat visits. and Cultural and Recreational Services activities during the continuing aftershocks. accounts for an estimated $630 million While occupancy rates remained relatively Issues and Opportunities (Infometrics’ Estimate annual average normal (51% on average through 2011, The 2009 Business Survey identified several 2010/2011, current prices) or 4% of excluding holiday parks, compared to constraints and opportunities in this sector. Christchurch’s GDP. The tourism spend 52% between 2001 and 2010), much of Constraints on business growth at that time will extend beyond these two sectors this was driven by the lower number of were related to the recession and funding »»There were an estimated 16,100 facilities available and the inflow of recovery and investment. Recruiting skilled staff was employees in Accommodation and workers initially after the earthquakes. Some also problematic for some businesses. Foods Services and Arts and Recreation displaced residents (during home repairs) Business objectives included increasing Services in Christchurch in 2011 were also unlikely to be spending significant profitability and growing in to new markets. »»These workers were employed in amounts in the city. Guest nights have been Funding was anticipated to be a problem in approximately 2,400 businesses significantly down and hotels in particular meeting these objectives. have been hit hard. The Tourism sector is »»In 2011 there were 4,200 guest nights in likely to feel pressure for some time but, as Canterbury, 13% of the national total the rebuild picks up and the new central city Sector Projects The tourism sector has a strong competitive is developed, it should be boosted by people Central City Plan wanting to experience the new Christchurch. advantage in Christchurch, with workers The Central City Plan, was released by the producing an estimated 6% more in value Christchurch Central Development Unit Gateway position added than New Zealand on average (CCDU) on 30 July 2012. This plan will (Canterbury Development Sector Selection Christchurch has traditionally acted as contribute significantly to the regeneration of Model). The sector was also found to have the natural gateway to the South Island. the city tourism sector. This includes a green significant flow-ons to other sectors, reflecting Increasing demand for adventure, wine urban frame, the Avon River precinct, a new the integrated nature of the tourism industry. and nature tourism, and the other activities convention centre, a multi-purpose stadium Christchurch tourism offerings include that the wider South Island has to offer, and a Performing arts and Music precinct. Hagley Park, the Avon River, the International further reinforces the value of Christchurch Antarctic Centre, the Air Force Museum International Airport. The strategic Tourism Sector Strategy significance of Christchurch International of New Zealand, the Canterbury Museum, Christchurch and Canterbury Tourism (CCT) Airport will remain as long as the city is able beaches, the ports of Lyttelton and Akaroa. is developing a recovery focused strategy to hold its position against other airports in that integrates with other stakeholders and Within close proximity of the city are various the South Island – such as Queenstown – plans (such as the Central City Plan and ski fields, Hanmer Springs Village, Kaikoura and continues to attract airlines. (which features Whale watching), Tekapo Hotel sector) to help the Tourism Sector. This plan will focus on improving air services, with its dark sky status, and Mt Cook and Developing Markets sports tourism and education tourism. surrounding lakes. Prior to the Earthquakes Christchurch had The rest of the South Island includes popular a high proportion of international visitors. In Direct Flights locations such as Queenstown and Wanaka 2010 46% of guest nights were international Christchurch International Airport Limited and The Southern Lakes, Fiordland, the visitors. These visitors spend more money and CCT are working together to promote Marlborough Sounds, Nelson and Tasman in the city than domestic visitors. The a great number of direct flights into and Golden Bays, the West Coast’s rugged proportion has since fallen to 39% (2011 Christchurch. coastline and Southland and Otago with its average). International travel was also abundant wildlife offerings. Tourism Related Sector Employee Breakdown 2011 Accommodation 19% Cafes, Restaurants and Takeaway Food Services 49% Pubs, Taverns and Bars 8% Clubs (Hospitality) 2% Heritage Activities 4% 57 Artistic Activities 2% Sport and Recreation Activities 14% Gambling Activities 4% Source: Statistics New Zealand
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 81 APPENDIX ONE: SECTOR PROFILES
11 Mining
While Mining is not a significant activity Sector Trends Sector Projects within Christchurch city, the city provides support and management services for China Exploration the industry. China’s economic growth is fuelling global Drilling results indicate the area has excellent demand for minerals including New potential for oil extraction, though further Zealand’s. Although Australia is still New exploratory work will be required. Quick facts Zealand’s biggest export destination, the The Canterbury basin is about 360,000 »»Contributes approximately $48 million to growth rate of exports to China is high. Christchurch GDP (Infometrics’ Estimate square kilometres, extending from the Canterbury Plains out to an offshore region annual average 2010/2011, Labour Market current prices) east of the South Island. The offshore part The Australian Mining sector is very of the basin has been identified as the »»Accounts for less than 1% of GDP in successfully drawing labour from New most promising, with about 10 likely sites Christchurch Zealand (and other parts of Australia) by identified in deep water. »»Around 40 business units are based in offering high wages and benefits to work in Christchurch (2011, Statistics the Australian mining sector. Role of Christchurch New Zealand) Christchurch is a logical location for head Central Government Policy »»Has around 340 employees (2011, offices for large scale operations in the South The current Government is investigating Statistics New Zealand) Island. policy and a regulatory framework that New Zealand has extensive coal resources, supports more mining and exploration – The advantages of being based in mainly in the Waikato and Taranaki regions but in a considered and environmentally Christchurch include: access to both a of the North Island and the West Coast, conscious manner – and an accelerated deep seaport and an international airport, Otago and Southland regions of the South process for large scale projects. The Ministry a network of mining personnel at all levels Island. Lignite is New Zealand’s largest fossil for the Environment is leading this review. living in the city, a relatively low cost of living fuel energy resource. There are over six and a business and financial services sector. billion tonnes of recoverable quantities in the 10 largest deposits. It has been estimated that national in-ground resources of all coals are over 15 billion tonnes, of which 80% are South Island lignites. South Island lignites are being evaluated for their potential for large-scale petrochemical processing in to a range of products, including transport fuels, briquettes and fertilisers. Solid Energy is the largest coal mining company in New Zealand and is currently a State-Owned Enterprise (SOE). Other large companies in the South Island mining sector are L&M Group and Oceania. New Zealand Petroleum & Minerals manages the New Zealand Government’s oil, gas, mineral and coal resources, known as the Crown Mineral Estate. They advise on policy and operational regulation and promote investment in the mineral estate.
58
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 82 APPENDIX ONE: SECTOR PROFILES
12 Construction
The Construction sector is currently being Sector Trends Sector Projects driven by the effects of the earthquake. Some 7,000 dwellings in the eastern Changes to Construction Methods Wave of Residential Subdivisions suburbs were categorised as uninhabitable, Since the earthquakes pre-fabricated Land rezoned in the greater Christchurch on ‘red zoned’. Over 1,200 buildings in components have been used more in the area during the last 18 months will provide the CBD are to be demolished. Following residential sector in response to the long sections for more than 20,000 households demolition and repairs will be a sustained lead times for traditional on-site construction. over the next five years. The majority of these period of construction. This is reducing build times to weeks rather will be in the south west and Belfast areas, than months. to the north in Waimakariri, and in Rolleston, Quick Facts Prebbleton and Lincoln as well as Wigram. Sustainability One of the largest greenfield developers Contributes approximately $630 million »» Environmental principles are impacting is Ng i Tahu Property Ltd (Wigram to Christchurch GDP (Infometrics’ urban design and planning practices Skies, Prestons) and other major players Estimate annual average 2010/2011, and the materials used on individual include Smith Developments, Parkside current prices) projects. Although turning principles in Developments and Maugers. »»Accounts for around 4% of GDP to regulation has been a slow process, in Christchurch councils provide information and advice Central City Rebuild »»Around 3,900 business units are on building sustainable homes and The Central City Development Unit’s based in Christchurch (2011, Statistics commercial/industrial buildings. HIVE, the Christchurch Central City Rebuild Plan New Zealand) Home Innovation Village, is a consortium envisages a more compact CBD involving of companies showcasing environmentally 12-17 anchor projects and an estimated »»Has around 11,400 employees sustainable houses produced using prefab mixed retail office space of 300-400,000 m2. (2011, Statistics New Zealand) or offsite construction technologies. Some of the major companies involved in the The construction sector’s diversity embraces rebuild include Hawkins Construction, Leighs everything from architectural design Construction, Naylor Love Construction, practices, specifers, quantity surveys, Fulton Hogan, Armitage Williams and Calder engineering design and consulting, project Stewart Developments. Encouraging more management, construction services residents in the central city is also a priority. (including site works, construction, roofing, and concrete), building installation services Rebuild Project Management Offices (including plumbing electrical, heating, The Canterbury construction sector has ventilation and air-conditioning) to building been transformed by the earthquakes of completion services that include plastering 2010-2011 and across all three sub-sectors and painting, glazing and fit out. the rebuild is being managed by a small In turn, these are supported by an group of large project management offices elaborate supply chain of mainly domestic (PMOs). manufacturers supplying materials and components involved in construction. Horizontal infrastructure: The reinstatement of roads and associated services is an alliance between Christchurch City Productivity growth in Construction in Council, CERA, New Zealand Transport Agency (NZTA), New Zealand is low, especially in residential Fulton Hogan, Downer Construction, Fletcher Construction, housing which impacts on McConnell Dowell New Zealand and City Care. The Alliance home affordability. work is managed by the Stronger Christchurch Infrastructural Rebuild Team (SCIRT), which is responsible for design, planning and cost estimation. Residential sector – Claims under $100,000: EQC appointed Fletcher Construction to run a Project Management Office, EQR, to manage insurance claims of less than $100,000. The work itself is carried out by more than 1,100 accredited contractors, who are predominantly Canterbury-based. Claims of over $100,000: Private insurers have adopted a similar approach, with repair/rebuild work being managed by project management offices (PMOs) with. The repair/ rebuild work is being undertaken by a pool of accredited 59 contractors. IAG appointed Hawkins; AMI appointed Arrow; Vero appointed MWH Mainzeal; Lumleys appointed Ireland and Tower appointed Stream.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 83 APPENDIX ONE: SECTOR PROFILES
13 General Manufacturing
The General Manufacturing sector is Sector Trends Sector Projects currently seeing high demand from rebuild activity. The sector complements the Civil construction consumables Irrigation Schemes High Value-Added Manufacturing sector, Manufacturing specialising in civil Two major irrigation schemes (Hurunui and focuses on less specialised areas of construction consumables such as speed irrigation and hydro scheme and Hunter manufacturing. formwork systems, concrete additives Downs Irrigation Scheme) are likely to have a have shown a more than 100% sales significant impact on general manufacturing increase in the past year and demand is in the city with significant demand for Quick Facts rapidly increasing. Manufacturing of pre- similarly skilled workers. »»Contributes approximately $490 million to nail trusses, wooden pre-framed building Christchurch GDP (Infometrics’ Estimate modules, steel-framed building modules annual average 2010/2011, current are all up 75 – 80% over pre-recession prices) numbers. »»Accounts for around 3% of GDP in Christchurch Concrete Industry »»Around 800 business units are based in Premix concrete has gone from a pre Christchurch (2011, Statistics earthquake production of 3,000 cubic New Zealand) metres per month to currently 16,000 cubic metres per month and is estimated to be »»Has around 6,700 employees (2011, at 1,000 cubic metres per day by the end Statistics New Zealand) of the first quarter of 2013. All other civil consumables such as reinforcing steel bar and mesh as well as fixing systems are following a similar trend. Quarries are ramping up to accommodate the requirements of the concrete industry but is in a somewhat easier situation as large volumes of recovered demolition concrete will be reused in the new concrete production as well as base coarse for roading.
General Manufacturing Sector Employee Breakdown 2011
Textile, Leather, Clothing and Footwear Manufacturing 26%
Wood Product Manufacturing 18%
Pulp, Paper and Converted Paper Product Manufacturing 6%
Printing 23%
Non-Metallic Mineral Product Manufacturing 12%
Furniture and Other Manufacturing 15%
Source: Statistics New Zealand
60
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 84 APPENDIX TWO: MARKET PROFILE
Market Profile: China
A market profile for China has been Sector Trends Sector Projects included as it is a rapidly growing market for New Zealand with plenty of potential. Increasing Trade with China International Student Marketing In 2011 it was the second largest market The volume of trade between China and Study Christchurch is conducting for commodity export from Christchurch New Zealand is increasing, with China marketing drives in China to attract Ports and is a focus of the Government’s now being our second largest trading students to New Zealand. Business Growth Agenda. partner behind Australia. This is in part being driven by the China/New Zealand Sister City and Other Civic Relationships Our key offshore products are education Free Trade Agreement (FTA). and dairy, but many other sectors are Christchurch city civic administration has exporting to China. sister city relationships in Wuhan City and China Urbanisation Gansu Province. The objective of sister city CDC has an Economic Relationships China has a growing middle class as a result relationships is to promote opportunities for Manager- Asia. This role involves of continuing urbanisation and growth in the trade and partnership, to share cultures and facilitating visits to China supporting local country. The growing middle class will lead build tourism links. institutions and businesses and facilitating to a growing demand for products such as civic and business connections in China. milk powder and meat, and luxury products Investment in Christchurch Rebuild The primary engagement is with Wuhan, such as wine and clothing. CDC is facilitating investment in Christchurch Hubei province. This is the established rebuild from China. economic city relationship, formalised by a Manufacturing Costs Memorandum of Understanding between The costs of mass production (particularly Direct flights to Christchurch from China CCC and the municipality of Wuhan. It is a in manufacturing and electronics) is still good central location to get to other cities CDC is helping a Chinese airline to explore cheaper than in New Zealand. However by air and high-speed train. CDC also has the opportunity to fly direct to Christchurch. China’s continued growth and inflation a membership at the NZ Central business is reducing its attraction as a low cost resource in Shanghai, providing hot desk Core Cities Project manufacturer, with some production office space when visiting Shanghai. The Core Cities project team has proposed facilities already moving to countries such as a project on outward facing economic Vietnam. Quick Facts growth. This would involve joint export-led engagement with China that builds on city »»Christchurch sent $990 million of cargo relationships and the roles of Mayors. exports to China in 2011, mostly through the seaport »»This represents around 12% of Christchurch’s total exports of cargo »»Around $442 million was exports of dairy produce and $200 million was exports of wool through the seaport »»Around 2% of New Zealand’s exports to China go through Christchurch »»2255 International Fee-Paying students from China studied in Canterbury during 2011, including 774 at tertiary institutions (Education Counts)
61
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 85 APPENDIX THREE
Risk Profiles
As the recent seismic activity illustrates, Events that could occur in greater economies are subject to a range of risks Christchurch include: that can push them off a growth path. »»Biosecurity breach While it is not possible to fully mitigate for »»Flood/ Climate risk every risk, it is useful to consider events that would have a significant impact. »»Tsunami »»Seismic Activity An internal workshop at Canterbury Development Corporation (CDC) »»Unexpected change to population profile performed a risk analysis on the city (such as age breakdown) economy. Three events listed in the table »»Euro collapse or further continuing global below were developed further to explore recession their effects. »»Oil price shock The group identified that following a major »»Natural disaster occurring outside event, assumed immediate effects tended Christchurch to be unique to the event, but assumed »»Major growth outside Christchurch long-term effects were similar across the (e.g. Auckland) three events. This could be the basis for a War research project by CDC and a regular city »» level economic risk assessment process similar to Civic Emergency planning and Some of the potential implications of three risk assessment processes. different events are given in the table below.
Event Immediate Effects Long Term or Common Effects
Further Seismic Activity »»Property damage »»Business failure »»Infrastructure damage (potentially long-term power issues if seismic »»Decreased exports activity occurs on the Alpine Fault) »»Decreased employment »»Population flight »»Decreased reputation »»Insurance issues »»Decreased production »»Loss of wealth »»Business relocation »»Capital flight »»Capital raising problems »»Decreased health and wellbeing of citizens
Flood or Drought »»Infrastructure damage (such as fencing, roads and irrigation) »»Loss of crops »»Loss of land »»Loss of export reputation »»Market risk »»Insurance risk »»Decreased land values »»Farm conversions
Further Global Recession or decline »»Retraction of global market in major trading partner (such as »Falling demand for exports Australia, China) » »»Increased cost of capital »»Fall in commodity prices »»Foreclosures »»Changes to migration patterns »»Variability in New Zealand dollar »»Liquidity issues 62
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 86 APPENDIX FOUR
Canterbury Development Economic Models
In 2009, CDC invested in the development of two economic models to help determine what the key industry sectors for the city are, and what the structure of the city might look like going forward. These two models were the Canterbury Development Model, developed with the Agribusiness and Economic Research Unit (AERU) at Lincoln University, and the Economic Futures Model (EFM), developed by Market Economics Limited. More information about each model is presented in the boxes below.
Canterbury Development Model Economic Futures (also known as the Sector Analysis Model) Model
Developed with the Agribusiness and Economic Developed by Market Economics Ltd. Research Unit (AERU) at Lincoln University, 2009
This model draws from numerous data sources The Christchurch Economic Futures Model (EFM) to establish a ranking of Christchurch’s industry is based on a multi-regional economic input-output sectors. Sector importance is established from five table. It captures the economic impacts of growth equally weighted criteria which are derived from nine paths through generating projections of final measures. These include: consumption over 25 years. The model is useful in forming a picture of the structure of the city’s »»Scale (Profile/Size and History of Exports) economy in the future given various assumptions. »»Potential for Market Growth This model is not used to rank sectors but the Canterbury Development Model draws from data »»High Value (Productivity and Worker Qualifications) contained within the EFM. »»Competitive Advantage (National and local) »»Flow on Effects (Value Added and Employment)
Criteria and Measures in the Sector Analysis Model
Criteria Measure Description Scale Profile in Christchurch Proportion of Christchurch’s value added
History in Christchurch Share of (commodity) exports from Lyttelton Seaport and Christchurch Airport 2000-2008
Potential Market Growth Potential for Market Change in percentage market share of expenditure for each sector Growth for the UK and US between 1975 and 2005
High Value Product Productivity Value-added per worker (Christchurch) Qualifications Percentage of workers with a qualification above level 4
Competitive Advantage Competitive Advantage Value-added per person in New Zealand compared to Australia, Germany, Japan, the United (nationally) Kingdom and the United States.
Local Competitive Value-added per full-time employee for Christchurch relative to value-added Advantage per full-time employee for New Zealand
Upstream Effects Value-Added Effects Value-Added multiplier measuring the secondary flows to other sectors from an initial output change in a sector Employment Effects Employment multiplier measuring the secondary employment flows to other sectors from an initial output change in a sector 63
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 87 APPENDIX FOUR
Canterbury Development Economic Models [cont.]
The Sector Analysis Model draws from the following data sources for its measures:
Measure Calculation Data Sources
Competitive Competitive Advantage for Purchasing Power Parity Advantage each Country Transaction: PPPGDP: Purchasing Power Parities for GDP (National) Measure: CD: National currency per US dollar New Zealand’s Competitive Frequency: Annual Advantage Persons Engaged Dataset: STAN Database for Structural Analysis Country: New Zealand; Australia; Germany; Japan; United Kingdom, United States Variable: EMPN Number of persons engaged (total employment) Value Added Dataset: STAN Database for Structural Analysis Country: New Zealand; Australia; Germany; Japan; United Kingdom, United States Variable: VALK Value-added, volumes
Potential for Change in Percent Market UK Expenditure Market Growth Share of Expenditure Source: National Statistics (UK) Dataset: UK Expenditure Time: 1963-2007 US Expenditure Source: Bureau of Economic Analysis (US) Dataset: US Expenditure Time: 1929-2007
History in Percent share of each Exports for Overseas Cargo (FOB NZ$) Christchurch sector in FOB Dataset: New Zealand Port by Country of Destination, Commodity (HS2) and Period Classification: New Zealand Harmonised System Classification Source: Statistics New Zealand Ports: Lyttleton Seaport and Christchurch Airport Years: 2000-2008
Profile in Percent Share of Christchurch’s Gross Output by Sector Christchurch Value-Added by Sector Source: Economic Futures Model v.0 Variable: Gross Output Regions: Christchurch City, Canterbury Region Time: 2004 Multipliers Source: Market Economics Filename: 100127 CC & CR Multipliers – 123IO & 48IO.xlsx Supplied: 27/01/2010
Value-Added Second-order effects for Market Economics Effects Value-Added 100127 CC & CR Multipliers- 123IO & 48IO.xlsx
Employment Effects Second-order effects for Market Economics Value-Added 100127 CC & CR Multipliers- 123IO & 48IO.xlsx
Productivity Productivity as Value-Added Source: Economic Futures Model v1.0 per FTE Sheets: Employment, Value Added Regions: Christchurch City, Canterbury Time: 2004
Qualifications % Qualified in each sector Source: Statistics New Zealand (>= level 4) Data: 2006 Census of Population and Dwellings Prepared for Simon Worthington, CDC 64 Reference Number: TRM26530
Competitive Value-Added/FTE for Christchurch Source: Economic Futures Model v1.0 Advantage (local) and the Rest of NZ Sheets: Employment, Value Added Time: 2004
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 88 APPENDIX FIVE
Innovation Cities Analysis
The Innovation Cities Global Index, 2011, produced by 2thinknow, provides a comparison of cities from around the world based on innovation. 2thinknow takes a broad view of innovation by considering cultural assets, human infrastructure and networked markets. Each city is given an innovation score out of a possible 30. This score is made up of three factors, each rated out of 10. Without going in to the methodology of how the scores are determined the following table Networked Markets shows how the three factors are broken down in to 31 segments. These segments provide further detail as to what is considered by 2thinknow under the title of innovation.
HUMAN 3 Factors 31 Segments INfrastructure
1 Architecture & Planning
2 Arts & Culture Cultural ASsets 3 Business
4 Environment & Nature ® 5 Fashion 2thinknow City Innovation Loop Model 6 Food Copyright © 2009. All rights reserved 1 / Cultural Assets 7 History
8 Information & Media
9 Music
10 People
11 Spirituality, Religion & Charities
12 Sports & Fitness
13 Basic Services
14 Commerce & Finance
15 Travel, Tourism & Cultural Exchange
16 Education
17 Government
18 Health & Medicine
19 Industry & Manufacturing
2 / Infrastructure Assets 20 Labour & Work
21 Law
22 Logistics
23 Mobility & Transport
24 Public Safety
25 Retail
26 Start-ups
27 Technology & Communications
28 Diplomacy & Trade
29 Economics 65 3 / Networked Markets 30 Geography
31 Military & Defence
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 89 APPENDIX SIX
Methodology for GDP Projections
Aspects of the city’s economy captured »»Sector Development Charting the Baseline, Upper Bands and in CEDS have been categorised as ‘step »»Business Development Declining Economy change’ or ‘keeps us competitive’. The Representation of City Economic Goals The goals are focused on Christchurch’s value of the five big ‘step change’ activities population and GDP and Canterbury’s To graphically and numerically represent has been estimated to provide a band GDP, to reflect the agricultural outcomes the concept of activities that ‘step change’ of economic growth above the baseline of the water strategy. Projections were versus ‘keeps us competitive’, both within achievable if the city successfully completes also required for Canterbury’s population and outside CDC and CEDS, an approach the ‘keeps us competitive’ activities. The to form part of the calculations and has been developed with four possibilities. methodology of the calculation of the various were done for Christchurch’s GDP for The methodologies for calculating each of projections is detailed below. information purposes. The methodology these projections are explained in this paper. for each of these is shown in this STEP CHANGE They include: document. All GDP Projections are in The factors that are likely to make a $m, 1995/1996 to show real growth. Baseline A baseline projection using difference to the Christchurch and historical growth rates which includes the Canterbury economies include: ‘must do’ components of the rebuild »»Maximising earthquake recovery opportunities: Earthquake recovery Upper Band An upper band which delivers the spending on new infrastructure, facilities baseline plus strong success at ‘step change’ and buildings is mostly in the local economy Declining Economy A regression line which »»Effective water resource management: shows a scenario where the ‘keeps us Increasing irrigation potential and competitive’ projects fail and the city and productivity in the Canterbury Plains region regresses while managing water quality »»Improving productivity through innovation: Businesses using new ideas, the latest technology, new buildings and Source: CDC, Infometrics, modern working techniques to improve Canterbury GDP Projections Statistics New Zealand, Market Economics productivity and develop a competitive 28000 edge 24000 »»Successful central city design and build: Creating a culturally attractive and vibrant 20000 city centre that attracts new businesses and people, and improving productivity in 16000 a more condensed CBD 12000 $m, 95/96 »»Increased exports and improved distribution networks: Meeting the 8000 Actual (estimated) Baseline (no rebuild) Government’s China export growth targets Baseline Declining Economy 4000 Additionally a successful rebuild and Upper Band creation of a great city will attract 0
migrants, boosting the population and 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 thus economic growth. These factors, if done well, can move the Source: CDC, Infometrics, Christchurch GDP Projections Statistics New Zealand, Market Economics economy off the projected baseline 16,000 growth path. 14,000 Other projects are likely to keep us competitive with other cities, matching our historical 12,000 growth path. Large step changes in GDP are 10,000 unlikely to result from these projects. 8,000 The areas included are: $m, 95/96 »»Workforce 6,000 66 Actual (estimated) Baseline (underlying) »»Making it easier to do business 4,000 »»Infrastructure Baseline Declining Economy 2,000 »»Supporting Innovation Upper Band »»Connections and Business Networks 0
»»Investment Vehicles 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 90 APPENDIX SIX
Methodology for GDP Projections [cont.]
Baseline projection- GDP Source: CDC, Infometrics, Statistics New Zealand, Underlying Growth Canterbury GDP Baseline Projections Market Economics 25000 To calculate the underlying baseline growth projections, the historical growth rate for Canterbury’s and Christchurch’s GDP between 20000 2000 and 2011 has been used (Infometrics’ estimates), with the 2010-2011 change being given a half weighting to reflect the unusual 15000 circumstances. This gives an average growth rate of 2.3% per annum for Canterbury and $m, 95/96 10000 1.9% for Christchurch. In order to account for the recession, the GDP projections are modelled to reach these historical growth 5000 rates each year by 2016, from the 2010-2011 Actual (estimated) Baseline (underlying) change of -4.6% and -7.1% (Canterbury and Baseline Christchurch respectively). This gives the 0 underlying growth. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Rebuild Source: CDC, Infometrics, An estimated $30 billion will be spent on the Statistics New Zealand, Christchurch GDP Baseline Projections Market Economics rebuild. It is estimated that this will be split 14,000 between Residential – 65%, Commercial – 20%, and Infrastructure – 15%. The baseline 12,000 includes the proportion that is very likely going to occur. This has been estimated at 80% of 10,000 Residential, 50% at Commercial and 100% of Infrastructure. The remainder will depend on 8,000 building a successful city which keeps residents
and commercial activity in the city. $m, 95/96 6,000
In order to calculate the annual impact on GDP, 4,000 the following steps were undertaken: »»The proportion of expenditure in each of the 2,000 Actual (estimated) Baseline (underlying) three categories was estimated based on Baseline current CERA estimates and can be updated 0 as more current data becomes available 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 »»Expenditure is deflated from current dollars to 1995/1996 dollars »»For Christchurch, only 90% of the residential expenditure was included to take in to account expenditure outside the territorial authority and moving from Christchurch to outlying areas. For Canterbury, the entire spend was included »»Each year’s expenditure is multiplied by the Value-Added:Output ratio for the relevant sectors from the Economic Futures Model, which accounts for the reallocation of resources from one sector in to another »»This was then multiplied by the relevant Type 1 multiplier to include indirect flow-on effects This gives an annual amount of addition to value added over the period of the rebuild 67
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 91 APPENDIX SIX
Methodology for GDP Projections [cont.]
Declining Economy - Regression Line Source: CDC, Infometrics, If Christchurch fails to do its ‘keep Canterbury GDP Projections Statistics New Zealand, Market Economics competitive’ projects, that is loses 25000 competitiveness, it is likely that the city will lose people and businesses. Even though 20000 the ‘must do’ rebuild may occur, the city would be unlikely to experience strong growth at the conclusion of the rebuild and 15000 its GDP would contract.
In order to present a realistic picture of $m, 95/96 10000 what could occur, growth data from ten similar-sized American cities that lost competitiveness has been used. Their 5000 Actual (estimated) Baseline (underlying) average five-year historical growth rate of -0.21% has been applied to Christchurch Baseline Declining Economy 0 growth, with 0.19% applied to Canterbury (reflecting the historical difference between 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 the two growth rates). Applied from 2017 with again a period of adjustment from the current growth rate. This is presented with
the baseline below. Source: CDC, Infometrics, Christchurch GDP Projections Statistics New Zealand, Market Economics The decline characteristics noted across 14,000 the ten American cities generally told a story of its proximity to another city that 12,000 was attracting people and businesses away from the declining cities, fuelling economic 10,000 recession. Low population growth, with a decreasing proportion at working age, 8,000 prevented economic growth and caused
high unemployment. $m, 95/96 6,000
4,000
2,000 Actual (estimated) Baseline (underlying) Baseline Declining Economy 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
68
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 92 APPENDIX SIX
Methodology for GDP Projections [cont.]
Step Change Growth Band Broadband Productivity Increases Global Distribution A band has been created representing An Economic Impact Assessment on ultra- Export growth is built in to the baseline. moderate to strong success with ‘step fast broadband was undertaken by Market Additional growth, as compared to what change’ projects. If we perform significantly Economics Ltd and CDC in 2010. The has occurred historically, may cause better than expected in each project it is annual estimates of the impact of broadband a step-change in growth as a result of possible to move beyond the upper band. calculated (using the Economic Futures superior initiatives that maximise free- If we complete only some of the projects, Model) were deflated to constant prices to trade agreements and offshore distribution Canterbury GDP may sit between the get the upper band of broadband investment networks as examples. baseline and the upper band band. The benefits to GDP. It is assumed that the »»The goals of the Ministry of Foreign Affairs band is intended to represent a range of benefit for Christchurch and Canterbury is and Trade (MFAT) (Opening Doors to possible scenarios likely through success the same (that is, nearly all the benefits take China – New Zealand’s 2015 Vision) for with most of the ‘step change’ projects. place within the city). China trade is a doubling of trade by 2015 Rebuild Success Central City and increasing tourism by 60% by 2015 The baseline includes 80% of residential and The current Blueprint shows a vibrant, The steps taken to calculate the annual 50% of commercial rebuild taking place. organised central city that is much smaller impact on GDP were: The upper band includes the remaining than previously. Estimates (Abel, J.(n.d.). China is New Zealand’s second largest 20% and 50%. This represents projects that Productivity and the Density of Human »» export partner and this is growing the are not guaranteed to occur, and may only Capital) show that doubling employment fastest. China has been chosen as a occur if an attractive investment proposal density can see productivity gains of proxy for potential trade performance is offered and the maximum amount of between 2% and 4%. This reflects the government and private investment is made. benefit of agglomeration. This could be »»Estimating Canterbury’s proportion of It also represents confidence by residents to realised if employment in the central city exports to China using Canterbury’s spend their insurance pay-outs on building returned to pre-earthquake levels in half the proportion of GDP (assumes the ratio of homes within the region. The same process area. The process for calculating the impact GDP:Chinese exports are equal. Taking is used to convert to value added as is used on GDP was: Lyttelton exports is not a true reflection of for the baseline. Canterbury’s production). The same can »»Estimate the sectorial productivity level be said for Christchurch. These figures in 2010 using Infometrics GDP and Water were deflated to constant prices employment estimates (Christchurch) The Agribusiness and Economic Research »»Applying the historical growth rate of »»Using employment numbers from Unit (AERU) at Lincoln University estimates exports to China for the 2011-2015 the old central city (three area units, the value to Canterbury of irrigation schemes period. This is the export baseline for various irrigation scenarios. These annual 2010 numbers, Statistics New Zealand estimates have been applied to the band, business frame) establish a weighted »»Smoothly moving to double Canterbury’s with the data rebased to 95/96 dollars, with average of sectorial productivity which and Christchurch’s 2011 exports by a starting date of 2014, building up over reflects the makeup of the central city 2015. The difference between this line five years. The upper band is set at 60% (note that this assumes productivity was and the export baseline is the impact uptake of 607,773 hectares (the Morgan et the same for the CBD and Christchurch on GDP. The 2015 difference is held al. estimate of remaining usable arable land, city in each sector) through to 2031 to reflect a higher level of exports carrying on AERU). »»Increasing productivity by 4% (upper band) over the 2018-2022 period, To estimate the impact on Christchurch A similar process was undertaken for when most of the central city rebuild is city, the average of the ratio of employees tourism numbers. expected to have occurred and geographic units in Christchurch and »»The proportion of all international Canterbury in Agriculture, Agriculture, »»The difference between this elevated visitors in Canterbury to New Zealand Forestry and Fishing Support Services, and growth path and projected growth path was applied to New Zealand Chinese Agricultural Machinery and Equipment for the central city (using the same visitor numbers Manufacturing were used to attempt to growth rate as the Christchurch baseline) estimate the proportion of direct and is the annual impact on GDP »»To calculate the proportion in upstream effects taking place in the Christchurch, the ratio of Accommodation city. Note that geographic units were and Food Services employees (2010, pre- used as well as employees to reflect earthquake) to Canterbury was used the large number of owner-operators in »»In order to calculate the economic the agricultural sector. This resulted in benefit from the increased tourism Christchurch experiencing around 11% numbers, the average expenditure of the benefits. It is likely there will be per visit (from Ministry of Tourism) 69 downstream benefits to the city as well, was applied, then adjusted to give such as distribution, but these have not value-added in constant prices been modelled.
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 93 APPENDIX SIX
Methodology for GDP Projections [cont.]
Increased Population Impact on GDP Source: CDC, Infometrics, Canterbury GDP Projections Statistics New Zealand, Market Economics If Christchurch recovers well and builds 28000 a world-class, vibrant city, it could attract an increasing number of migrants. The 24000 methodology for calculating the increased 20000 population is given below. The ratio of the higher ‘attractive city’ population, 16000 both Christchurch and Canterbury, to the population baselines is applied to the 12000 $m, 95/96 baseline, underlying, GDP growth projection to estimate the additional value added these 8000 Actual (estimated) Baseline (no rebuild) extra residents could produce. This is added Baseline Declining Economy 4000 to the upper band. Upper Band 0 Upper Band 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 The upper band components from the five
‘step change’ projects and the additional Source: CDC, Infometrics, population were added to the baseline to Christchurch GDP Projections Statistics New Zealand, Market Economics create a band of where GDP might perform 16,000 if success is achieved in these areas. 14,000
12,000
10,000
8,000
$m, 95/96 6,000 Actual (estimated) Baseline (underlying) 4,000 Baseline Declining Economy 2,000 Upper Band 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
70
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 94 APPENDIX SEVEN
Methodology for Population Projections
Source: CDC, Statistics New Zealand, Baseline Projection Canterbury Population Projections Market Economics The Christchurch City baseline projection 700,000 was obtained by post-earthquake projections 650,000 undertaken for Urban Development Strategy (UDS) partners in March 2012 by Market 600,000 Economics. The ‘quick recovery’ scenario was used. The scenarios see recovery to 550,000 the pre-earthquake growth trend within 10 500,000 years, following an initial population loss of 2.5% for Christchurch city and slow growth 450,000 until 2016, followed by stronger recovery in 400,000 the 2016-2021 period. 350,000 To calculate the Baseline for Canterbury, it is Actual (estimated) Baseline assumed that wider Canterbury grows at the 300,000 historical growth rate. Therefore the baseline 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 projection for Canterbury was calculated by: »»Calculating the pre-earthquake projection for the rest of Canterbury by subtracting Source: CDC, Statistics New Zealand, the (Statistics New Zealand) Christchurch Population Projections Market Economics 420,000 pre-earthquake projections for Waimakariri, Christchurch and Selwyn 400,000 »»Calculating the annual growth for this Canterbury-greater Christchurch series. 380,000 This represents the growth expected in
the rest of Canterbury 360,000 »»The 2012 estimate for Canterbury- UDS was calculated using population 340,000 estimates (from Market Economics). The growth rates for Canterbury – greater 320,000 Christchurch and Canterbury – UDS were Actual (estimated) Baseline assumed to be the same (some areas 300,000 in greater Christchurch fall outside the UDS). These calculated growth rates 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 were applied to 2012 to get the projection for Canterbury less the UDS »»The UDS projection (Market Economics) was then added to get the total projection for Canterbury »»Some smoothing was required between 2012 and 2015
71
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 95 APPENDIX SEVEN
Methodology for Population Projections
Declining Population Growth Rate growth rate of only 0.13% on average per If Christchurch does not build an exciting, annum. This growth rate has been applied vibrant city, its population could suffer. Fewer to the long run Christchurch rate, coming people could choose to rebuild in the city, in to effect once the majority of the rebuild residents may leave and few migrants may be has taken place. A similar methodology was attracted. The ten US cities39 used to model used for Canterbury, assuming the rest of the GDP decline experienced a population Canterbury outside the UDS grows as normal.
Canterbury Population Christchurch Population Source: CDC, Statistics New Zealand, Source: CDC, Statistics New Zealand, Projections Market Economics Projections Market Economics 700,000 420,000
650,000 400,000 600,000 380,000 550,000
500,000 360,000
450,000 340,000 400,000 320,000 350,000 Actual (estimated) Baseline Decline Actual (estimated) Baseline Decline 300,000 300,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Attractive City growth rate of 0.11 percentage points per If Christchurch becomes a world-class, annum was applied to the Christchurch (and vibrant city, it is possible that a higher UDS) population from 2018 onwards (with number of people will be attracted than adjustments between 2012 and 2018 to the baseline suggests. Five similar sized reflect the main recovery period), resulting US cities which have been experiencing an in Christchurch experiencing around 2.2% increasing population growth rate over an population growth by 2031. 40 extended period of time were examined. It is assumed that the area outside the UDS The average change in their population in Canterbury will grow at the baseline rate.
Canterbury Population Christchurch Population Source: CDC, Statistics New Zealand, Source: CDC, Statistics New Zealand, Projections Market Economics Projections Market Economics 750,000 460,000
700,000 440,000
650,000 420,000 600,000 400,000 550,000 380,000 500,000 360,000 450,000 340,000 400,000 Actual (estimated) Decline Actual (estimated) Decline 350,000 320,000 72 Baseline Attractive City Baseline Attractive City 300,000 300,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
39 Canton-Massillon, OH; Dayton, OH; Flint, MI; Hickory-Lenoir-Morganton, NC; Lake Charles, LA; Naples-Marco Island, FL; Stockton, CA; Toledo, OH; Vallejo-Fairfield, CA; Youngstown-Warren-Boardman, OH-PA 40 Appleton; WI; Bakerfield-Delano, CA; Fargo, ND-MN; Huntsville, AL; Kenneiwck-Pasco-Richland, WA
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 96 APPENDIX EIGHT
Glossary
AERU Agribusiness and Economics Research Unit
CBD Central Business District
CCC Christchurch City Council
CCDU Christchurch Central Development Unit
CCT Christchurch & Canterbury Tourism
CEDS Christchurch Economic Development Strategy
CERA Canterbury Earthquake Recovery Authority
CPIT Christchurch Polytechnic Institute of Technology
ECAN Environment Canterbury
ERP Economic Recovery Programme
FTE Full Time Equivalent staff
GDP Gross Domestic Product
ICT Information and Communications Technology
LGNZ Local Government New Zealand
LURP Land Use Recovery Plan
MBIE Ministry of Business, Innovation and Employment
NZTA New Zealand Transport Authority
PEPR Partnership for Economic Prosperity and Recovery
PMO Project Management Office
PTE Private Training Establishment
R&D Research and Development
RONS Roads of National Significance, NZTA key roading projects
SCIRT Stronger Christchurch Infrastructure Rebuild Team
SOE State-Owned Enterprise VAF Volunteer Army Foundation 73
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 97 APPENDIX NINE
Bibliography
Disaster
74
background paper to the christchurch economic development strategy ATTACHMENT 2 TO CLAUSE 3 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 98
Canterbury Development Corporation Level 1, 99 Cashel Street Christchurch 8011, New Zealand Phone: 03 379 5575 Email: [email protected] www.cdc.org.nz 99
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4. PERFORMANCE REPORT FOR THE SIX MONTHS TO 31 DECEMBER 2012
General Manager responsible: Paul Anderson – General Manager, Corporate Services Officer responsible: Diane Brandish, Corporate Finance Manager Peter Ryan, Corporate Performance Manager Author: Paul Anderson – General Manager, Corporate Services
PURPOSE OF REPORT
1. This report updates the Corporate and Financial Committee on service delivery, financial, and capital works programme performance results for the six months to 31 December 2012. The budgets and targets in this paper are based on those approved by the Council in the 2012-13 Annual Plan.
2. The report includes an updated overview on the financial impact of the earthquake on the Council for the six months to 31 December 2012.
EXECUTIVE SUMMARY
3. Attached are appendices showing summaries of:
Levels of Service graph as at 31 December 2012 (Appendix 1) Levels of Service forecast to fail to meet targets as at 31 December 2012 (Appendix 1a) Levels of Service where intervention is required to meet targets (Appendix 1b) Financial performance as at 31 December 2012 (Appendix 2) Significant capital projects (>$250,000) as at 31 December 2012 (Appendix 3) Housing Development fund and Christchurch Earthquake Mayoral Relief fund as at 31 December 2012 (Appendix 4).
Levels of Service
4. CCC is meeting the majority of its Level of Service targets (88.3%) in the first half of the year. Of the remainder, some are the result of facility closures affecting patronage targets. Others (primarily in consenting) are against very stringent targets meaning that the failure of a single consent by a single day compromises the target for the year.
5. Appendix 1a lists those Levels of Service where the target is forecast to not be achieved, along with staff commentary.
6. Appendix 1b lists those Levels of Service where intervention is required to meet targets along with staff commentary and remedial actions.
Financial Performance
7. The key financials for the 2012/13 year are summarised in the table below. An expanded view of the Council’s financial results is provided in Appendix 2. 100
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4 Cont’d
Forecast Carry Year to Date Results Forecast Year End Results Forward Carry Actual Plan Variance Forecast Plan Variance Result $000's Fwd Council Activities Operational Expenditure 202,294 216,405 14,111 408,694 424,027 15,334 1,000 14,334 Operational Funding 182,811 191,615 -8,803 367,949 388,138 -20,189 -20,189 Ratepayer cash operating deficit 19,482 24,790 5,307 40,745 35,890 -4,855 1,000 -5,855
Earthquake Response Operational Expenditure 50,832 39,798 -11,034 90,421 56,191 -34,230 -34,230 Operational Funding/recoveries 30,534 22,211 8,323 55,831 30,090 25,741 25,741 Earthquake response borrowing required 20,298 17,587 -2,711 34,591 26,102 -8,489 -8,489
Capital Works Programme 50,754 107,020 56,266 203,856 271,625 67,770 58,526 9,244 Works Programme Funding 33,791 32,847 944 71,055 117,343 -46,288 50,000 3,712 Works Programme Borrowing Requirement 16,963 74,173 57,210 132,800 154,282 21,482 8,526 12,956
Earthquake Rebuild 243,387 263,052 19,665 621,115 658,369 37,254 26,126 11,128
8. The ratepayer cash operating deficit is currently $5.3 million better than budget, but is forecast to be $5.9 million over budget at year end after carry forwards. Paragraphs 12-15 provide details. Following this December forecast, further work has improved the year-end forecast by $2 million, which bring the deficit close to that used in the 2013-16 Three Year Plan. Staff are working to improve this position further through reduced costs and maximising cost recoveries and we expect the March forecast to be closer to the budgeted deficit.
9. Net earthquake emergency and response costs are currently $2.7 million higher than budget and forecast to be $8.5 million higher than budget. Forecast costs of $90.4 million are $34.2m higher than budget; this variance largely consists of Building assessment and repairs $15.9 million (mainly Heritage Properties $5.4 million; Sporting Facilities $3.7 million; Community Centres $1.8 million; Commercial properties $1.7 million; Libraries $1.5 million, and Housing $1.3 million), infrastructure related response costs $15.4 million, increased cost of working $1.4 million and other response costs $1.5 million.
10. The Capital Works Programme is forecast to be $9.2 million below budget, after net carry forwards currently identified of $58.5 million are taken into account.
11. The Earthquake Rebuild is forecast to be $37.3 million below budget this year. This is due to a forecast under-spend in the Water Supply ($43.2 million), Roading ($20.0 million), Pump Stations ($4.4 million), and Buildings and Facilities ($19.4 million) areas, partially offset by forecast over- spends in Wastewater ($48.1 million) and Stormwater ($1.6 million). These are all timing variances in the multi year programme. To date, $26.1 million of infrastructure rebuild carry forwards have been identified, resulting in an overall forecast underspend of $11.1 million.
Operational Expenditure
12. Operating expenditure for Council activities is currently $14.1 million below budget. This is largely due to lower personnel costs as a result of existing vacancies across the organisation, particularly in the Building Consents/Inspections, Resources Consents, Building Policy, Libraries, Art Gallery and Recreation Facilities areas. Grants costs are also below budget; some of this is timing due to a number of grants not yet paid out, however some of it is a permanent saving, such as the Residential/Commercial Incentive grants which will no longer be paid out. Other favourable timing variances include Maintenance costs (mainly Roading Infrastructure and CBD/Pedestrian Mall areas) and Consultants' Fees, however a significant catch-up is forecast in these areas by year-end. Partially offsetting this are Legal costs, which are currently higher than budget (and forecast to remain so), mainly relating to the UDS and Royal Commission; and higher costs relating to software fees and licences.
101
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4 Cont’d
13. Operating expenditure is forecast to be $15.3 million below budget at year-end (before carry forwards). As with the year-to-date variance, the majority of the favourable forecast variance is due to forecast personnel cost savings as a result of existing vacancies not expected to be filled this financial year. While a catch-up in roading maintenance is forecast, an overall maintenance cost underspend remains forecast, largely due to the Cathedral Square/CBD Pedestrian Mall areas remaining closed for longer than was originally anticipated. Grants costs are forecast to be below budget at year-end, mainly due to the Residential/Commercial Incentive ($1.5 million) and Heritage Incentive ($1.0 million) grants not expected to be paid out (the latter will be requested to be carried forward).
Operational Funding
14. Operational funding for Council activities is $8.8 million lower than budget. This is mainly due to significantly lower revenue in the Building Consents/Inspections and Resource Consents areas ($5.2 million) as a result of a lower volume of consent applications than expected. Revenue targets were set very high this year with the expectation that the rebuild would have gained significant momentum by this stage of the year. Also contributing to the year-to-date shortfall are lower than budget rates and interest revenue. Partially offsetting this however, is higher than budget revenue from recreation programmes (pool programmes, fitness memberships) and higher disposal fees revenue relating to the Burwood Landfill.
15. Further deterioration of Building Consents/Inspections and Resource Consents revenue is forecast by year-end, and represents $9.7 million of the total forecast shortfall of $20.2 million. Further deterioration of interest and rates revenue is also forecast (expected to be $7.0 million and $2.0 million below budget respectively). Other significant unfavourable variances include revenue shortfalls from NZTA operational subsidies ($0.9 million) and Art Gallery shop sales ($0.5 million).
Capital Works Programme
16. The Capital Works Programme is $56.3 million below budget for the year-to-date. The largest variances are in the Wastewater Collection and Treatment ($22.4 million below budget); Streets and Transport ($8.9 million); Parks and Open Spaces ($7.9 million); Community Support ($6.4 million) and Water Supply ($5.2 million) areas.
17. The Wastewater Collection and Treatment variance is mainly due to delays on various projects, including the Wigram Pressure Main & Pump Station 105 ($3.1 million), Western Interceptor Future Stages ($3.0 million), Major Trunk Expansion ($2.7 million), Fendalton Duplication ($1.9 million), and Extension to Charteris Bay ($1.1 million). The Streets and Transport variance is also due to a number of delays across the whole programme, the largest being Carriageway Sealing and Surfacing ($1.2 million), Causeway Culvert and Walls ($0.7 million), Road Pavement Replacement ($0.5 million) and Main Road 3 Laning ($0.5 million). Partially offsetting these under-spends is a year-to-date over- spend of $0.7 million relating to the Ferrymead Bridge. The Parks & Open Spaces under-spend mainly relates to the Botanic Gardens Entry Pavilion ($2.5 million behind budget), and Waterways & Wetlands and Neighbourhood Reserves purchases (a total of $1.0 million), with the balance due to a large number of smaller under-spends across the whole programme. The Community Support variance is due largely to two projects; the Salvation Army Citadel project not going ahead ($5.5 million year-to-date), and delays relating to the new Halswell Suburban Community Centre ($0.7 million behind budget). The Water Supply variance is also due to a number of under-spends, the most notable being Little River Increased Supply $0.8 million; Halswell Junction from Wilmers Road ($0.8 million) and Palmers Road Pump Station ($0.4 million), with the balance spread across the rest of the programme. Partially offsetting these under-spends is an over-spend relating to Victoria Reservoirs 2 & 3 replacement ($1.0m higher than budget).
18. The Capital Works Programme is forecast to be $67.8 million below budget (before carry forwards). The largest forecast underspends are in the Corporate ($21.9 million below budget, largely for Strategic Land Acquisitions no longer required); Streets and Transport ($11.9 million); Parks and Open Spaces ($9.7 million); Community Support ($8.1 million); Wastewater Collection and Treatment ($6.8 million) and Water Supply ($4.9 million) areas.
102
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4 Cont’d
19. As at 31 December 2012, $58.5 million of likely carry forwards have been identified, resulting in an overall forecast under-spend of $9.2 million for the 2012/13 year. Significant carry forwards identified include: Strategic Land Acquisitions $18.7 million; Wigram Magdala Grade Separation $5.4 million; Botanic Gardens Entry Pavilion ($5.1 million); Prestons/Clare Park ($4.4 million); WW Wairakei Diversion ($3.9 million); WW Extension to Charteris Bay ($3.6 million); Halswell New Library $3.3 million); Main Road 3 Laning ($1.9 million); Halswell New Suburban Community Centre ($1.8 million); Little River Increased Supply ($1.5 million) and Akaroa Water Upgrade ($1.4 million). With the Council’s recent approval of the Draft Three Year Plan, staff will review the required carry-forwards and report an updated position in the March Performance Report.
20. Financial details of significant capital projects, including proposed carry-forwards and bring-backs, are shown in Appendix 3.
Capital Funding
21. Development Contributions revenue able to be allocated to fund completed work is forecast to be $1.0 million higher than budget at year-end, as shown in Appendix 2.
22. Capital grants and subsides are forecast to be $2.8m higher than budget, mainly due to Capital Works Programme (non-EQ) NZTA capital subsidies forecast to be $5.9m higher than budget, partially offset by the $3.25m capital contribution towards the Salvation Army Citadel which is no longer forecast.
Operational Activities
23. The City & Community Long Term Policy & Planning forecast variance is due to Commercial and Residential Incentive grants (total of $1.5 million) that are no longer forecast to be paid out.
24. The Heritage Protection year-to-date variance is mainly due to timing around various grants. The forecast variance is due to the Heritage Incentive grants ($1.0 million) not expected to be paid out this financial year (and will be requested to be carried forward).
25. The City Planning and Development Capital Revenues forecast variance reflects earthquake capital recoveries relating to forecast expenditure on the Victoria Clock Tower.
26. The Social Housing year-to-date and forecast variances are due to higher than budgeted EQ insurance recoveries, and savings in insurance costs due to the inability to purchase full cover. However this is partially offset by lower rental revenue due to further facilities closures.
27. The Art Gallery & Museums year-to-date and forecast variances reflect lower operating and personnel costs, partially offset by lower revenue from Art Gallery shop sales, as a result of closed facilities.
28. The Libraries forecast variance is due to lower personnel costs, partially offset by lower revenue as a result of the closure of the Bishopdale, Sumner and South Libraries for EQ repairs.
29. The Cultural & Learning Services Capital Revenues year-to-date and forecast variances relate to Art Gallery and Libraries EQ insurance recoveries, due to very little facilities rebuild expenditure having yet occurred.
30. The Neighbourhood Parks forecast variance reflects savings on operating and maintenance costs, in addition to lower depreciation costs.
31. The Sports Parks year-to-date variance is due to maintenance costs well ahead of budget, however this is largely a timing issue around various contracts, with the activity forecast to be on budget at year-end.
32. The Garden & Heritage Parks year-to-date variance is due to an under-spend on maintenance costs relating to the Botanic Gardens, however this is largely timing, with the activity forecast to be on budget at year-end. 103
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4 Cont’d
33. Waterways & Land Drainage year-to-date variance is largely due to a timing difference on EQ expenditure ($1.2 million behind budget). There is also $1.0 million of unbudgeted EQ recoveries relating to crown recoveries which were not budgeted against this activity. The year-end forecast largely reflects these unbudgeted recoveries, with EQ expenditure forecast to be close to budget.
34. The Parks & Open Spaces Capital Revenues variance is mainly due to EQ rebuild recoveries being lower than budget (Stormwater $4.6 million and Parks $0.8 million), in line with current rebuild expenditure. Parks development contributions revenue is also lower than budget ($0.7 million) but is offset by Waterways & Wetlands development contributions which are $0.6m higher than budget. The forecast variance reflects EQ capital recoveries lower than budget (Parks $4.3 million and Stormwater $3.0 million), with total development contributions revenue forecast to be close to budget overall.
35. The Recreation and Sports Services year-to-date and forecast variances reflect higher revenue from pool programmes and fitness memberships (forecast to be $1.4 million higher than budget). Also contributing to the forecast variance is lower depreciation costs of $0.8 million.
36. The Events and Festivals forecast variance is largely due to (unbudgeted) costs associated with the operation of the Geo Dome ($0.2 million), in addition to lower forecast sponsorship revenue.
37. Recreation and Leisure Capital Revenues are forecast to be $1.6 million higher than budget due to higher EQ insurance recoveries and development contributions revenue ($1.2 million and $0.4 million higher than budget respectively).
38. The Residual Waste Collection and Disposal favourable year-to-date and forecast variances are due to lower than budgeted maintenance costs (mainly relating to the CBD) and higher revenue from dumping fees (due to a volume increase).
39. The Licensing and Enforcement year-to-date variance reflects an under-spend in the Environmental Compliance and Enforcement areas (mainly legal fees), in addition to higher revenue from Parking Enforcement. The forecast variance also reflect higher parking enforcement revenue, in addition to lower cordon management costs due to a reduction in temporary staff hours.
40. The Building Consenting & Inspections year-to-date and forecast variances reflect significantly lower revenue in the Building Consents & PIMS, Building Inspections, and Code Compliance areas. Also contributing to the variances are higher costs relating to geotech assessments.
41. The Building Policy year-to-date and forecast variances are mainly due to costs associated with the Earthquake Royal Commission and Weathertight Homes (forecast to be $0.5 million and $0.2 million higher than budget respectively).
42. The Road Network activity is $3.2 million below budget, $1.1 million of which relates to net EQ costs lower than budget (although these are forecast to be only $0.2m below budget at year-end) with the balance due largely to a maintenance cost under-spend totalling $1.8 million (mainly in the carriageways, kerb and channel and bridges/structures areas) and higher commercial rent revenue $0.3 million. The maintenance costs under-spend is largely timing, with a significant catch-up forecast by year-end.
43. The Active Travel year-to-date and forecast variances reflect lower maintenance costs due to the on- going closure of Cathedral Square and other CBD pedestrian mall areas.
44. The Parking activity forecast variance reflects an under-spend in operating costs ($0.7 million) due to carpark closures, partially offset by lower revenue from On-Street parking (0.2 million).
45. Streets & Transport Capital Revenues year-to-date variance of $26.4 million is represented by lower EQ capital recoveries $28.1 million below budget (NZTA $31.3 million below budget, partially offset by higher insurance recoveries of $3.2 million), however this is partially offset by higher non-EQ NZTA capital subsidies and development contributions revenue ($1.3 million and $0.4 million higher then budget respectively). The year-end forecast reflects total EQ capital recoveries $4.1 million higher than budget, with non-EQ NZTA subsidies and development contributions forecast to increase to be a total of $6.5 million higher than budget. 104
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4 Cont’d
46. Wastewater Collection has two key variances. Revenues are due to a recalculation of estimated recoveries from the Crown and Insurance companies in EQ Wastewater Collection costs. Expenditure variance is due to a reforecast of the estimated impact of extending the Red Zones offers, which is expected to cost an additional $3-5 m over the next few months. A report is underway to better understand this impact going forward.
47. The Wastewater Treatment & Disposal year-to-date favourable variance of $1.6 million is due to lower operating and maintenance costs (total of $1.2 million) and higher revenue from tankered waste ($0.7 million), although partially offsetting this are higher depreciation costs ($0.3 million). While operating/maintenance and depreciation costs are forecast to remain close to current levels, tankered waste revenue is forecast to increase to $1.3 million higher than budget.
48. Wastewater Collection & Treatment Capital Revenues are $13.7 million below budget, which is almost entirely related to EQ capital recoveries. Wastewater and Pump Station recoveries are $8.7 million and $10.3 million lower than budget respectively, while CWTP capital recoveries are $5.1 million higher. The year-end forecast reflects EQ capital recoveries significantly higher than budget ($34.1 million); Wastewater and CWTP recoveries are forecast to be $32.0 million and $14.0 million higher than budget respectively, partially offset by Pump Station capital recoveries, which are forecast to be $12.0 million lower.
49. The Water Supply year-to-date variance reflects net EQ costs $1.2 million higher than budget, partially offset by higher revenue from excess water charges ($0.2 million). The net EQ costs variance is largely timing, with costs forecast to reduce to $0.3m higher than budget by year-end.
50. The Water Supply Capital Revenues year-to-date and forecast variances are both due to EQ capital recoveries being lower than budget, in line with the infrastructure rebuild spend.
51. The Corporate Revenues & Expenses year to date variance of $58.8 million higher than budget is largely due to accrued EQ capital recoveries from the Crown and NZTA (both $36.7 million respectively) relating to unallocated SCIRT setup/overhead costs (which are $122.6 million year to date). This is partially offset by insurance LAPP (F) capital recoveries $16.2 million lower than budget due to very little facilities rebuild expenditure having yet occurred this year. The forecast variance reflects higher EQ capital recoveries ($1.7 million), higher dividends revenue ($0.4 million) and lower interest costs ($0.9 million), partially offset by lower rates revenue ($1.0 million) and higher depreciation costs ($0.6 million)
Earthquake Costs
$ million 2012/13 YTD Forecast 2012/13 Actual Results Cost Recovery Net Cost Cost Recovery Net Cost Plan Variance Emergency and Response costs 50.8 30.5 20.3 90.4 51.4 39.0 30.5 8.5 Rebuild Costs 245.7 172.6 73.1 621.2 395.9 225.3 262.0 (36.7) Total 296.5 203.2 93.4 711.6 447.4 264.3 292.5 (28.2)
52. Emergency/response costs totalling $50.8 million have been incurred year-to-date; $33.3 million relates to infrastructure response costs, $12.2 million relates to facilities (Libraries, Art Gallery, Sport Facilities, Housing, Heritage Properties), $4 million to Geotech, and $1.3m increased costs of working. This results in a year-to-date net cost to Council of $20.3 million which is $2.7 million higher than budget. This net cost is forecast to be $39 million at year end, $8.5 million higher than budget.
53. Rebuild expenditure of $621.2 million is currently forecast, which is $11.1 million below this year’s budget after $26.1 million of carry forwards.
54. Of the total forecast expenditure, $435.4 million relates to SCIRT costs (Wastewater Collection $266.0 million; Roading $119.7 million; Water Supply $26.3 million; and Stormwater $23.4 million). The balance relates to non-SCIRT (Council-delivered) works ($84.3 million) and Facilities ($99.1 million), in addition to $2.4 million for work carried out and paid for by the Christchurch Earthquake Appeal Trust. 105
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4 Cont’d
55. Details of forecast costs and recoveries for 2012/13 are:
2012/13 Forecast ($m) Cost Accrued Recoveries Balance LAPP (F) DIA/CERA NZTA Other Council Infrastructure Rebuild: Roading 127.7 0.0 - 95.8 - 31.8 Sewer 241.2 - 147.9 - - 93.4 Water 38.9 - 23.7 - - 15.3 Stormwater 24.4 - 7.8 - - 16.6 SCIRT setup and overhead costs unallocated (0.0) - (0.0) (0.0) - 0.1 Total 432.3 0.0 179.3 95.7 - 157.2 Other Assets and Insured Costs: Buildings and Facilities 104.5 57.5 - - - 47.0 Housing ------Sewer above-ground assets 53.1 45.1 - - - 8.0 Water above-ground assets 15.9 15.5 - 0.0 - 0.4 Stormwater above-ground assets 0.1 0.1 - - - 0.0 Uninsured Assets (Parks, Stormwater) 15.3 0.0 - 0.2 2.4 12.7 Total 188.9 118.3 - 0.2 2.4 68.1 Total Infrastructure Rebuild: 621.2 118.3 179.3 95.9 2.4 225.3 Emergency & Response Costs: Roading emergency works 1.4 - (2.0) 1.0 - 2.4 Welfare and other emergency works 0.2 - (9.8) - - 10.0 Other Response costs 10.5 1.3 11.8 0.0 (0.0) (2.6) Roading temp maintenance works 7.0 - 0.6 3.7 - 2.7 3 Waters temp maintenance works 41.5 (2.5) 19.9 - (0.1) 24.1 Buildings assessment and repair 16.2 14.0 0.6 - 0.1 1.5 Housing assessment and repair 1.3 - 0.0 - 1.3 0.0 Parks repairs 5.3 0.2 0.5 - 0.0 4.6 Demolition costs - 4.4 - - (4.4) Rockfall 5.3 - 2.9 0.7 (0.0) 1.7 Increased costs of working 1.7 1.2 0.2 - 1.3 (1.1) Total Emergency & Response Costs: 90.4 14.2 29.1 5.5 2.6 39.0 Grand Total 711.6 132.5 208.5 101.4 5.0 264.3
Do the Recommendations of this Report Align with 2009-19 LTCCP budgets?
56. Yes.
LEGAL CONSIDERATIONS
Have you considered the legal implications of the issue under consideration?
57. Yes – there are none.
ALIGNMENT WITH LTCCP AND ACTIVITY MANAGEMENT PLANS
58. Both service delivery and financial results are in direct alignment with the LTCCP and Activity Management Plans.
Do the recommendations of this report support a level of service or project in the 2009-19 LTCCP?
59. As above.
ALIGNMENT WITH STRATEGIES
60. Not applicable. 106
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
4 Cont’d
CONSULTATION FULFILMENT
61. Not applicable.
STAFF RECOMMENDATIONS
That the Committee recommend to the Council that it receive the report.
APPENDIX 1 TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 107
Appendix 1 - Forecast Levels of Service Achievement (as at 30 December 2012)
Forecast Level of Service Achievement As at 31 December 2012
100%
88.3%
80%
60%
40% Percent of Levels of Service of Levels of Percent
20%
6.0% 5.7%
0%
Will meet targets Corrective action required Will fail to meet targets
APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 108
Level of Service Exceptions As of 31 December 2012
Levels of service which are forecast to fail to meet target
City and Community Long-Term Policy and Planning Measure: 1.0.4 The recovery of suburban centres is supported by urban design and planning initiatives (Ferry Road) Target: Draft Ferry Rd (Stage 1) Master Plan for consultation presented to Council by September 2012 Results: Jan/Feb 2013 Comments: Carried over from previous months. Delay caused by need for Corridor Study Remedial Action: Minimise further delays
Art Gallery and Museums Measure: 3.0.13 Cost of providing Akaroa Museum service Target: Average operating cost per visitor of <$15.00 ongoing Results: Museum remains closed over the summer, with no visitors through the door, so target will not be met Comments: Despite some earlier indications that the Museum might be able to manage a partial reopening for the 2012/13 summer, it is clear now that this will not happen. Visitors attending various Museum-organised events at other venues are being counted but numbers are relatively low. Operating costs on the other hand, remain similar, as all staff continue to work from the safe parts of the building, and a programme of off-site exhibitions and events is being delivered Remedial Action: Average operating cost per visitor will be calculated on a pro-rata basis once we are through the summer months. Offerings to visitors include street-side interpretation of heritage buildings, tabloid newspaper, a new off-site exhibition and a brochure answering visitors' FAQs
Measure: 3.0.14 Akaroa Museum: number of visitors per annum Target: Visitors per annum for Akaroa Museum to be a range of 14,250 - 15,750 Results: The Museum has been closed since June 2012 and a hoped-for partial opening for the summer has not eventuated, meaning that the target for visitor numbers will not be met. Comments: While it remains closed the Museum is engaging with summer visitors to Akaroa via a range of means. A free tabloid newspaper has been distributed within Akaroa and throughout the wider area; viewers of off- site exhibitions and street-side interpretation are estimated at 90-100 per day during the summer months and a brochure answering visitors' FAQs has been developed and distributed. Remedial Action: The Museum's efforts to engage with summer visitors will continue, and staff will estimate numbers based on head counts.
APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 109
Measure: 3.0.15 Akaroa Museum: hours of opening Target: Minimum of 2,093 opening hours per annum Results: 0 hours open to the public since 1 July 2012 Comments: Museum has been closed since 21 June due to failure to meet NBS Remedial Action: Facilities Rebuild staff recommendation is that Museum remains closed for another 12 months while strengthening of buildings is undertaken, and aim for reopening a refurbished Museum, with refreshed exhibitions, for the 2013/14 summer
Libraries Measure: 3.1.2 Residents have access to a physical library relevant to local community need or profile Target: Provide for 10 voluntary libraries - support for collections Comments: Support the five voluntary libraries that remain open Remedial Action: Explore alternative accommodation options through the facilities rebuild process
Regional Parks Measure: 6.3.3 Number of students attending environmental education programmes each year Target: 8,000 - 9,500 each year (on Parks and other Council sites like Waste facilities) Results: 2,755 students have participated in the programme this financial year. Comments: Although there is an increase in participation rates from the previous year we will not reach the target of 8,000 to 9,500 students participating in the programmes. This a reflection of the uncertainty presently effecting a number of Christchurch schools. Remedial Action: Promotion and redevelopment of the programmes continues.
Residual Waste Collection and Disposal Measure: 8.1.2 Residual waste collected at the kerbside by Council services Target: <= 90 kg residual waste collected at the kerbside by Council service / person / year Results: 106.39 kg Comments: The introduction of the kerbside service resulted in a change in the way residents treated their waste. Rubbish was disposed of at kerbside and vehicle numbers through transfer stations dropped. Street cleaning in some areas also reduced as illegal dumping dropped. Total waste to landfill has decreased, but waste disposal behaviour has changed Remedial Action: Reconsider KPI for next Annual Plan
Building Consenting and Inspections Measure: 9.1.1 % of all building consent applications processed within statutory timeframes APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 110
Target: 100% of all building consents granted within 20 working days Results: 93% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Measure: 9.1.2 % of all build consent applications processed within statutory timeframes Target: 100% of all commercial 3 consents granted within 20 working days Results: 90% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: 80% of all commercial 1 and 2 consents granted within 15 working days Results: 68% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: 85% of all residential building consents granted within 10 working days Results: 43% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Measure: 9.1.5 % of all building consent applications processed within statutory timeframes: Target: For value of build works: $150,000 to $499,999: average processing time of 10 working days or less (exclude suspend time) and average total elapsed time of 20 calendar days Results: 15 working days processing and 34 days total elapsed Comments: There are still a number of aged consents with long suspend periods, skewing total elapsed time. We are waiting for new technology to activate the 'refusals' process. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: For value of build works: $500,000 to $999,999: average processing time of 15 working days or less (exclude suspend time) and average total elapsed APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 111
time of 25 calendar days Results: 16 processing days and 48 days total elapsed. Comments: We still have many aged consents left on suspend by applicants that create extreme results in total elapsed results. Waiting for new technology before commencing 'refusals' policy and process. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes. Target: For value of build works:<$150,000, average processing time of 5 working days or less (exclude suspend time) and average total elapsed time of 15 calendar days Results: 9 days processing, 17 days total elapsed Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: For value of build works: >$1,000,000: average processing time of 20 working days or less (exclude suspend time) and average total elapsed time of 35 calendar days Results: 16 processing days and 51 days total elapsed Comments: We still have a number of aged consents on long suspend delays. These create extreme total elapsed results. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Measure: 9.1.7 Code Compliance Certificate (CCC) applications processed in a timely manner: Target: For value of build works; $500,000 to $999,999: Average processing time of 15 working days or less (exclude suspend time) and average total elapsed time of 25 calendar days Results: 1 working day processing and 2 working days total elapsed Comments: We have suffered from poor applications requiring further information and the 20 day clock continues to run. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes. Target: For value of build works; <$150,000: Average processing time of 5 working days or less (exclude suspend time) and average total elapsed time of 15 calendar days Results: 13 working days processing and 40 working days total elapsed Comments: We have suffered from poor applications requiring further information and the 20 day clock continues to run. APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 112
Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: For value of build works; >$1,000,000: Average processing time of 20 working days or less (exclude suspend time) and average total elapsed time of 35 calendar days Results: 3 working days processing and 10 working days total elapsed Comments: We have suffered from poor applications requiring further information and the 20 day clock continues to run. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes. Target: For value of build works;$150,000 to $499,999: Average processing time of 10 working days or less (exclude suspend time) and average total elapsed time of 20 calendar days Results: 9 working days processing and 67 working days total elapsed Comments: our current technology does not facilitate good quality control on applications for code certificate. we have suffered from poor applications requiring further information and the 20 day clock continues to run. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: Processing of 100% Code Compliance Certificates completed within 20 working days Results: 80% Comments: Our current technology does not facilitate good quality control on applications for code certificate. We have suffered from poor applications requiring further information and the 20 day clock continues to run. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Measure: 9.1.11 Processing of Project Management Office (PMO) earthquake related building consents Target: For PMO residential consents; 99 per cent processed within 5 working days Results: Not available at this time. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 113
Target: For all other residential consents: 100 per cent processed within 20 working days Results: 92% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: For commercial category 1 and 2 consents: 100 per cent processed within 20 working days Results: 94% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Target: For commercial category 3 consents: 100 per cent processed within 20 working days Results: 90% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Land and Property Information Services Measure: 9.4.2 Residential property files provided to customers in electronic format Target: 100% within 3 working days of request Results: 96.52% Remedial Action: Continual monitoring of service delivery is undertaken weekly.
Measure: 9.4.8 Pre-application meeting records provided to all parties in attendance Target: 90% provided within 2 working days of meeting conclusion Results: 56% Comments: Recent process improvements have resulted in a percentage increase previous months. Remedial Action: Continual monitoring and collaboration of service delivery is necessary to ensure this trend continues.
Resource Consenting Measure: 9.2.2 % of complex resource consents processed within statutory timeframes Target: 100% within the statutory timeframes Results: 120/122 - 98%; 667/674 - 99%. APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 114
Measure: 9.2.3 % of Central City land use consents processed within timeframes Target: 100% in 14 days(10 working days) Results: 9/12 - 75%; YTD 36/45 - 80%.
Measure: 9.2.4 % of Permitted Temporary Accommodation applications processed in timeframes Target: 100% within 3 working days Results: 4/5 - 75%; YTD 36/45 - 80%.
Measure: 9.2.5 % of Site Specific Temporary Accommodation applications processed within timeframes Target: 100% within 5 working days Results: 6/6 100%; YTD 21/55 38%.
Measure: 9.2.9 % of complex subdivision consents within statutory timeframes Target: 100% within statutory timeframes Results: 18/19 - 99%; YTD 132/133 - 99%. Comments: One application went over time. Remedial Action: Reminder about importance of targets to be circulated.
Wastewater Treatment and Disposal Measure: 11.1.5 CWTP Electricity use Target: <=0.35 kwh of electricity / kg COD (chemical oxygen demand) removed at the Christchurch Wastewater Treatment Plant each year Results: 0.44kwh/kgCOD Remedial Action: Will recommend LOS be adjusted at next Annual Plan.
Water Supply Measure: 12.0.1 Continuous potable water is supplied to all customers Target: <=9 unplanned interruptions / 1000 properties served per year Results: 8.09 Comments: We will not make this KPI. We will be near or over it by the end of January 2013 Remedial Action: SCIRT to complete main renewals and Leak Detection programmes
APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 115
Levels of service for which intervention is required to meet target
Civil Defence Emergency Management Measure: 2.5.8 Welfare Centres and Sector Posts are adequately staffed. Target: Sector posts at least 25% staffed by 30/6/2014 Results: Staffing levels for Sector Posts have dropped consistently since the earthquakes. Comments: Recruitment drives are required to boost numbers. A volunteer induction and retention policy/plan is planned to retain existing numbers. Remedial Action: Plan recruitment drive, and develop volunteer induction policy and volunteer retention plan.
Target: Welfare Centres at least 90% staffed Results: Volunteer numbers have declined consistently since the earthquakes. Comments: Recruitment drives are required to boost numbers. A volunteer induction and retention policy/plan is planned to retain existing volunteers. Remedial Action: Plan recruitment drive and develop volunteer induction and retention policy/plan.
Art Gallery and Museums Measure: 3.0.10 International Museum standards maintained: climate control Target: Humidity and temperature is maintained at 50%+/- 5% and at 21o+/- 2oC 24 hours a day/7 days a week/365 days a year (24/7/365) respectively. Results: Temperature control for the building overall was maintained within KPI range 79% on avg during December 2012. A drop from the November average of 80%. Humidity overall was maintained within KPI range 68.3% on avg during December. Comments: In touring where the collection is stored, we maintained an average temperature of 100% and humidity 99.3% during December 2012. Remedial Action: Touring Galleries where the Collection is being stored at present is maintained very well. Set point Solutions have set up access to the BMS for Lynley McDougall to monitor environmental conditions at any point in the day. This allows immediate reporting for more stringent monitoring and ability to immediately identify and rectify issues.
Libraries Measure: 3.1.6 Collections are available to and meet the needs of the community (non- LTCCP) Target: Maintain cost per transaction of $2.73 or less Results: Comments: Current performance year to date indicates that remedial action will be required to meet this target. Remedial Action: Develop a plan for external marketing and staff initiatives to increase transactions by approx 5% per month to year end.
APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 116
City Governance and Decision-making Measure: 4.0.1 Percentage of residents who understand how Council makes decisions Target: 40% Remedial Action: Some of the Council decisions re the Communications audit will assist in addressing this.
Measure: 4.0.2 Percentage of residents satisfied that the Council makes decisions in the best interests of Christchurch Target: 48% Remedial Action: Some of the Council decisions re the Communications audit will assist in addressing this.
Public Participation in Democratic Processes Measure: 4.1.1 Percentage of residents that feel the public has some or a large influence on decisions the Council makes Target: 61% Remedial Action: Some council decisions on the Communications audit will assist in working towards meeting this target.
Measure: 4.1.7 Proportion of residents that are satisfied with the opportunities to access information about Council decisions. Target: 80% Remedial Action: The current target is a high one and may not be met despite new initiatives being put in place as a result of the Communications Audit.
Civic and International Relations Measure: 5.0.3 Sister City Relationships reviewed 3 yearly in accordance with International Relations Policy Target: Establish a working party to review the IR Policy and Sister Cities Strategy / Policies and report back by 28 Feb 2013 Results: The Council resolved that a working party be established to review the IR policy and Sister Cities strategy and report back to the Council by 28 Feb 13. Due to resourcing the commencement of this project has been delayed. Comments: Preliminary meetings have been held by Strategy and Planning to determine the scope of work required and to draft a terms of reference for the review. Remedial Action: Strategy and Planning will report back to the Council with the terms of reference and likely revised timeframe of the review.
Regional Economic Development, Business Support and Workforce Development Measure: 5.1.8 CCT promotes Christchurch and Canterbury as a desirable destination for business events and trade exhibitions Target: Achieve a share of national delegate days for MICE (Meetings, Incentive, Conference and Exhibitions) market in the3.5% to 5.0% range
APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 117
Comments: 4th Qtr 2011/12 results = 2% 1st Qtr 2012/13 results are not yet available Remedial Action: Await 1st quarter figures and then plan remedial action.
Measure: 5.1.14 Visitors utilise www.christchurch.com service Target: Increase average time on site from 3:55minutes by 3% each year (based on 2011/12 FY estimate) Comments: Currently, average time on site is 2:31 minutes. We have recently completed a period of campaign activity which while dramatically increasing our site visits has had a negative impact on the average time spent on the site. This shows that customers were pushed to the site through the campaign activity, but were less engaged than our typical visitor. However, for the month of December the average time on site has increased to 2:44 minutes. Remedial Action: We are currently 6 months into a year long project to upgrade christchurchnz.com. The addition of more editorial content during this upgrade should also positively increase average time on site.
Target: Increasing page views from 4.0 pages by 3% each year(based on 2011/12 FY estimate) Comments: Currently, pages viewed per visit are at 2.93. We have recently completed a period of campaign activity which while dramatically increasing our site visits has had a negative impact on pages viewed per visit. This shows that customers were pushed to the site through the campaign activity, but were less engaged than our typical visitor. However, for the month of December the pages viewed per visit has already bounced back to 3.17. Remedial Action: We are currently 6 months into a year long project to upgrade christchurchnz.com. The addition of more editorial content during this upgrade should also positively increase pages viewed per visit.
Measure: 5.1.20 Visitors utilise the services of the Christchurch and Akaroa Visitor Information Centres Target: Akaroa Visitor Centre maintains visitor number levels in the range of 165,000 to185,000 visitors annually for the duration of relocated cruise ship visits Comments: Visitor number 2012/13 FYTD 45,032Estimated target 2012/13 FYTD 88,91949% down. The primary reason for the downturn is the lack of international and domestic self drive holiday travellers visiting Akaroa. Remedial Action: Continue to encourage international and domestic self drive travellers to visit Akaroa.
Measure: 5.1.22 CCT continue an active communication programme with media and trade Target: Sustain presence at offshore trade training functions and sustained levels of media and trade familiarisations (famils) (based at 2011/12 levels): Familiarisations carried out with 150media individuals, per annum Comments: Over the first two quarters CCT have carried out familiarisations with 55 individual media. This total is slightly down on projections due to the freeze that Tourism New Zealand put on non-Hobbit media. CCT were APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 118
64% down on individual media numbers through Tourism New Zealand’s International Media Programme over this past quarter compared to the same quarter in the previous year. Remedial Action: CCT will continue to monitor this change but do expect Tourism New Zealand media numbers to increase in the coming quarters. CCT will continue to undertake the planned schedule as per the CCT Communications Plan.
Waterways and Land Drainage Measure: 6.5.2 Customer satisfaction with the maintenance of waterways and their margins Target: At least 66% customers satisfied with the maintenance of waterways and their margins Comments: Dependent on results of customer survey May 2013 Remedial Action: Maintain level of service through ongoing contract management
Building Consenting and Inspections Measure: 9.1.4 % satisfaction with building consents process Target: 65% of customers satisfied Remedial Action: Working on shifting our relationship with customers.
Measure: 9.1.6 Efficiency: Cost per transaction Target: Average cost ($) of processing a building consent - $1,610 Results: $1551 Comments: A number of variables impact on these results, including new geotechnical report check requirements, larger works now as many more total rebuilds, elimination of many minor works (low cost jobs) as now exempt. Remedial Action: New technology to assist in driving down cost.
Measure: 9.1.11 Processing of Project Management Office (PMO) earthquake related building consents Target: One Stop Shop consents: 100 per cent processed within 20 working days Results: Not available Comments: Case Managers in place. Pre-application meetings and good quality applications will help. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Measure: 9.1.12 Building Inspections carried out in a timely manner Target: 99% of inspections carried out within 3 working days Results: 100% Remedial Action: Reassess service requirements and better match skill and experience level APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 119
to requirements of the jobs. Use lesser skilled and new inspectors for low complexity jobs.
APPENDIX 1A TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 120
Measure: 9.1.13 Earthquake Code Compliance Certificates granted within 20 working days Target: 100% Results: 100% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Enforcement and Inspections Measure: 9.0.8 Percent of complaints about excessive noise responded to within one hour Target: 90% Results: 82.7% (1253 of 1515 complaints) Comments: Average attendance time is 37.9 minutes. Very high levels of after hours noise concentrated at weekends have stretched contractor's resources. Remedial Action: Figures are provisional as at 15/1. Further data analysis to be completed.
Resource Consenting Measure: 9.2.13 % Development Contributions assessments completed Target: 98% within 10 working days Comments: New team members training in role Remedial Action: Training continuing. Processes and improvements under review.
Water Supply Measure: 12.0.1 Continuous potable water is supplied to all customers Target: <=1 unplanned interruption >=4hrs on average per week each year Comments: Likely to miss this target after a couple of months with higher results Remedial Action: City Care are concentrating on this LOS at present
Measure: 12.0.2 Risk to potable water supply is managed (grading) Target: Cc or better risk grading from the Ministry of Health for all rural area water supplies by Dec 2013 Comments: There is some delivery risk (Akaroa Water plant) Remedial Action: Project management is being carefully monitored
Target: Move Da to Ba grading for the Northwest supply zone by December 2013 Remedial Action: New LTP (TYP) will align capital funding and compliance dates.
APPENDIX 1B TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 121
Levels of service for which intervention is required to meet target
Civil Defence Emergency Management Measure: 2.5.8 Welfare Centres and Sector Posts are adequately staffed. Target: Sector posts at least 25% staffed by 30/6/2014 Results: Staffing levels for Sector Posts have dropped consistently since the earthquakes. Comments: Recruitment drives are required to boost numbers. A volunteer induction and retention policy/plan is planned to retain existing numbers. Remedial Action: Plan recruitment drive, and develop volunteer induction policy and volunteer retention plan.
Target: Welfare Centres at least 90% staffed Results: Volunteer numbers have declined consistently since the earthquakes. Comments: Recruitment drives are required to boost numbers. A volunteer induction and retention policy/plan is planned to retain existing volunteers. Remedial Action: Plan recruitment drive and develop volunteer induction and retention policy/plan.
Art Gallery and Museums Measure: 3.0.10 International Museum standards maintained: climate control Target: Humidity and temperature is maintained at 50%+/- 5% and at 21o+/- 2oC 24 hours a day/7 days a week/365 days a year (24/7/365) respectively. Results: Temperature control for the building overall was maintained within KPI range 79% on avg during December 2012. A drop from the November average of 80%. Humidity overall was maintained within KPI range 68.3% on avg during December. Comments: In touring where the collection is stored, we maintained an average temperature of 100% and humidity 99.3% during December 2012. Remedial Action: Touring Galleries where the Collection is being stored at present is maintained very well. Set point Solutions have set up access to the BMS for Lynley McDougall to monitor environmental conditions at any point in the day. This allows immediate reporting for more stringent monitoring and ability to immediately identify and rectify issues.
Libraries Measure: 3.1.6 Collections are available to and meet the needs of the community (non- LTCCP) Target: Maintain cost per transaction of $2.73 or less Results: Comments: Current performance year to date indicates that remedial action will be required to meet this target. Remedial Action: Develop a plan for external marketing and staff initiatives to increase transactions by approx 5% per month to year end.
APPENDIX 1B TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 122
City Governance and Decision-making Measure: 4.0.1 Percentage of residents who understand how Council makes decisions Target: 40% Remedial Action: Some of the Council decisions re the Communications audit will assist in addressing this.
Measure: 4.0.2 Percentage of residents satisfied that the Council makes decisions in the best interests of Christchurch Target: 48% Remedial Action: Some of the Council decisions re the Communications audit will assist in addressing this.
Public Participation in Democratic Processes Measure: 4.1.1 Percentage of residents that feel the public has some or a large influence on decisions the Council makes Target: 61% Remedial Action: Some council decisions on the Communications audit will assist in working towards meeting this target.
Measure: 4.1.7 Proportion of residents that are satisfied with the opportunities to access information about Council decisions. Target: 80% Remedial Action: The current target is a high one and may not be met despite new initiatives being put in place as a result of the Communications Audit.
Civic and International Relations Measure: 5.0.3 Sister City Relationships reviewed 3 yearly in accordance with International Relations Policy Target: Establish a working party to review the IR Policy and Sister Cities Strategy / Policies and report back by 28 Feb 2013 Results: The Council resolved that a working party be established to review the IR policy and Sister Cities strategy and report back to the Council by 28 Feb 13. Due to resourcing the commencement of this project has been delayed. Comments: Preliminary meetings have been held by Strategy and Planning to determine the scope of work required and to draft a terms of reference for the review. Remedial Action: Strategy and Planning will report back to the Council with the terms of reference and likely revised timeframe of the review.
Regional Economic Development, Business Support and Workforce Development Measure: 5.1.8 CCT promotes Christchurch and Canterbury as a desirable destination for business events and trade exhibitions Target: Achieve a share of national delegate days for MICE (Meetings, Incentive, Conference and Exhibitions) market in the3.5% to 5.0% range
APPENDIX 1B TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 123
Comments: 4th Qtr 2011/12 results = 2% 1st Qtr 2012/13 results are not yet available Remedial Action: Await 1st quarter figures and then plan remedial action.
Measure: 5.1.14 Visitors utilise www.christchurch.com service Target: Increase average time on site from 3:55minutes by 3% each year (based on 2011/12 FY estimate) Comments: Currently, average time on site is 2:31 minutes. We have recently completed a period of campaign activity which while dramatically increasing our site visits has had a negative impact on the average time spent on the site. This shows that customers were pushed to the site through the campaign activity, but were less engaged than our typical visitor. However, for the month of December the average time on site has increased to 2:44 minutes. Remedial Action: We are currently 6 months into a year long project to upgrade christchurchnz.com. The addition of more editorial content during this upgrade should also positively increase average time on site.
Target: Increasing page views from 4.0 pages by 3% each year(based on 2011/12 FY estimate) Comments: Currently, pages viewed per visit are at 2.93. We have recently completed a period of campaign activity which while dramatically increasing our site visits has had a negative impact on pages viewed per visit. This shows that customers were pushed to the site through the campaign activity, but were less engaged than our typical visitor. However, for the month of December the pages viewed per visit has already bounced back to 3.17. Remedial Action: We are currently 6 months into a year long project to upgrade christchurchnz.com. The addition of more editorial content during this upgrade should also positively increase pages viewed per visit.
Measure: 5.1.20 Visitors utilise the services of the Christchurch and Akaroa Visitor Information Centres Target: Akaroa Visitor Centre maintains visitor number levels in the range of 165,000 to185,000 visitors annually for the duration of relocated cruise ship visits Comments: Visitor number 2012/13 FYTD 45,032Estimated target 2012/13 FYTD 88,91949% down. The primary reason for the downturn is the lack of international and domestic self drive holiday travellers visiting Akaroa. Remedial Action: Continue to encourage international and domestic self drive travellers to visit Akaroa.
Measure: 5.1.22 CCT continue an active communication programme with media and trade Target: Sustain presence at offshore trade training functions and sustained levels of media and trade familiarisations (famils) (based at 2011/12 levels): Familiarisations carried out with 150media individuals, per annum Comments: Over the first two quarters CCT have carried out familiarisations with 55 individual media. This total is slightly down on projections due to the freeze that Tourism New Zealand put on non-Hobbit media. CCT were APPENDIX 1B TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 124
64% down on individual media numbers through Tourism New Zealand’s International Media Programme over this past quarter compared to the same quarter in the previous year. Remedial Action: CCT will continue to monitor this change but do expect Tourism New Zealand media numbers to increase in the coming quarters. CCT will continue to undertake the planned schedule as per the CCT Communications Plan.
Waterways and Land Drainage Measure: 6.5.2 Customer satisfaction with the maintenance of waterways and their margins Target: At least 66% customers satisfied with the maintenance of waterways and their margins Comments: Dependent on results of customer survey May 2013 Remedial Action: Maintain level of service through ongoing contract management
Building Consenting and Inspections Measure: 9.1.4 % satisfaction with building consents process Target: 65% of customers satisfied Remedial Action: Working on shifting our relationship with customers.
Measure: 9.1.6 Efficiency: Cost per transaction Target: Average cost ($) of processing a building consent - $1,610 Results: $1551 Comments: A number of variables impact on these results, including new geotechnical report check requirements, larger works now as many more total rebuilds, elimination of many minor works (low cost jobs) as now exempt. Remedial Action: New technology to assist in driving down cost.
Measure: 9.1.11 Processing of Project Management Office (PMO) earthquake related building consents Target: One Stop Shop consents: 100 per cent processed within 20 working days Results: Not available Comments: Case Managers in place. Pre-application meetings and good quality applications will help. Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Measure: 9.1.12 Building Inspections carried out in a timely manner Target: 99% of inspections carried out within 3 working days Results: 100% Remedial Action: Reassess service requirements and better match skill and experience level APPENDIX 1B TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 125
to requirements of the jobs. Use lesser skilled and new inspectors for low complexity jobs.
APPENDIX 1B TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 126
Measure: 9.1.13 Earthquake Code Compliance Certificates granted within 20 working days Target: 100% Results: 100% Remedial Action: Staff are working on new processes to improve delivery. This includes process improvements targeted at cycle time and rework volumes as well as new technology as approved by Council. Continue to work on new technology and processes.
Enforcement and Inspections Measure: 9.0.8 Percent of complaints about excessive noise responded to within one hour Target: 90% Results: 82.7% (1253 of 1515 complaints) Comments: Average attendance time is 37.9 minutes. Very high levels of after hours noise concentrated at weekends have stretched contractor's resources. Remedial Action: Figures are provisional as at 15/1. Further data analysis to be completed.
Resource Consenting Measure: 9.2.13 % Development Contributions assessments completed Target: 98% within 10 working days Comments: New team members training in role Remedial Action: Training continuing. Processes and improvements under review.
Water Supply Measure: 12.0.1 Continuous potable water is supplied to all customers Target: <=1 unplanned interruption >=4hrs on average per week each year Comments: Likely to miss this target after a couple of months with higher results Remedial Action: City Care are concentrating on this LOS at present
Measure: 12.0.2 Risk to potable water supply is managed (grading) Target: Cc or better risk grading from the Ministry of Health for all rural area water supplies by Dec 2013 Comments: There is some delivery risk (Akaroa Water plant) Remedial Action: Project management is being carefully monitored
Target: Move Da to Ba grading for the Northwest supply zone by December 2013 Remedial Action: New LTP (TYP) will align capital funding and compliance dates.
APPENDIX 2 TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 127 Appendix 2 – Financial Performance as at 31 December 2012
Operational and Capital Funding
Year to Date Results Forecast Year End Results After Carry Forwards Carry Actual Plan Variance Forecast Plan Variance Result $000's Fwd Operating expenditure 235,896 238,999 3,103 463,693 443,835 (19,858) 1,000 (20,858) Capital programme 294,007 369,983 75,976 825,170 880,443 55,273 34,652 20,621 Transfers to reserves 37,773 33,292 (4,481) 75,358 67,010 (8,348) (8,348) Interest expense 17,230 17,204 (26) 35,422 36,384 962 962 Debt repayment 2,153 2,153 - 4,306 4,306 - - Total expenditure 587,059 661,631 74,571 1,403,949 1,431,977 28,029 35,652 (7,623) funded by : Fees, charges and operational subsidies 84,875 78,755 6,121 161,573 144,400 17,173 - 17,173 Dividends and interest received 31,695 30,654 1,040 65,835 65,599 236 - 236 Rates 154,783 156,227 (1,444) 311,170 313,180 (2,009) - (2,009) Transfers from reserves 248,062 268,058 (19,997) 629,062 666,376 (37,314) 26,126 (11,188) Asset sales 305 - 305 1,103 1,205 (102) - (102) Development contributions allocated 3,853 4,327 (475) 9,610 8,655 956 - 956 Capital grants and subsidies 5,937 4,583 1,354 13,040 10,236 2,804 - 2,804 Total funding available 529,509 542,604 (13,095) 1,191,394 1,209,651 (18,257) 26,126 7,869 Balance required 57,551 119,027 61,476 212,555 222,327 9,772 9,526 246 Borrowing for Capital Prog/Grants 17,770 76,650 58,880 137,219 160,335 23,116 8,526 14,590 Borrowing for EQ Response 20,298 17,587 (2,711) 34,591 26,102 (8,489) - (8,489) Ratepayer cash opex surplus (deficit) (19,482) (24,790) 5,307 (40,745) (35,890) (4,855) (1,000) (5,855)
Group of Activities Operating Result
Year to Date Results Year End Forecast
$000's Actual Plan Variance Forecast Plan Variance City & Community Long-Term Policy & Planning 6,464 6,759 295 14,167 15,792 1,624 District Plan 1,471 1,518 47 3,153 3,004 (149) Heritage Protection 1,950 5,427 3,477 9,756 11,042 1,286 Energy Conservation 86 44 (42) 87 87 0 Capital Revenues (240) - 240 (1,750) - 1,750 City Development 9,730 13,748 4,017 25,413 29,924 4,511 Building Strong Communities 2,212 2,547 335 5,403 5,443 40 Community Facilities 1,101 1,035 (66) 2,145 2,068 (77) Community Grants 8,179 7,961 (218) 10,899 10,703 (196) Social Housing 2,577 3,574 998 3,512 5,177 1,664 Civil Defence Emergency Mgmt (1,920) (2,139) (220) (1,191) (1,498) (308) Walk In Customer Services 982 1,058 75 1,927 2,073 146 Capital Revenues (39) - 39 (39) - 39 Community Support 13,092 14,035 944 22,656 23,964 1,308 Art Gallery and Museums 8,023 8,496 473 14,058 14,732 674 Libraries 14,749 14,957 208 28,952 29,504 552 Capital Revenues (357) (14,541) (14,184) (13,248) (29,081) (15,833) Cultural and Learning Services 22,416 8,913 (13,503) 29,761 15,155 (14,607) City Governance and Decision Making 4,631 4,764 133 9,551 9,631 80 Public Participation in Democratic Processes 1,419 1,447 28 2,894 2,894 0 Democracy & Governance 6,050 6,211 161 12,445 12,525 80 Civic and International Relations 665 600 (65) 1,178 1,138 (40) Regional Economic Development 4,362 4,341 (21) 7,726 7,825 99 City Promotion 174 201 26 522 473 (49) Economic Development 5,202 5,142 (60) 9,426 9,436 10 Neighbourhood Parks 6,866 7,080 214 16,118 16,491 372 Sports Parks 5,052 4,586 (467) 9,139 9,174 35 Garden & Heritage Parks 3,032 3,542 510 7,240 7,301 61 Regional Parks 5,103 5,252 149 10,679 10,524 (155) Cemeteries 685 550 (135) 1,390 1,264 (126) Waterways & Land Drainage 1,995 4,125 2,130 14,691 15,958 1,267 Harbours & Marine Structures 46 93 47 (21) (18) 3 Rural Fire Fighting 318 376 58 682 670 (12) Capital Revenues (3,008) (8,583) (5,575) (12,170) (19,575) (7,406) Parks & Open Spaces 20,090 17,023 (3,068) 47,750 41,789 (5,960) APPENDIX 2 TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 128
Year to Date Results Year End Forecast
$000's Actual Plan Variance Forecast Plan Variance Recreation and Sports Services 6,266 7,381 1,114 12,942 15,118 2,175 Events & Festivals 4,322 4,485 162 6,735 6,305 (430) Venue Management (Vbase) 62 13 (49) 37 (10) (47) Capital Revenues (425) (891) (466) (3,358) (1,781) 1,577 Recreation and Leisure 10,226 10,987 762 16,357 19,631 3,275 Recyclable Materials Collection & Processing 3,260 3,432 172 6,791 6,874 83 Residual Waste Collection & Disposal 6,322 6,754 432 12,851 13,444 592 Organic Material Collection & Composting 6,419 6,739 320 13,094 13,474 380 Commercial/Industrial Waste Minimisation 168 213 44 491 492 0 Capital Revenues ------Refuse Minimisation & Disposal 16,169 17,138 969 33,228 34,284 1,056 Licensing and Enforcement (3,158) (2,631) 527 819 1,153 335 Building Consenting & Inspections (630) (5,093) (4,462) 230 (5,620) (5,850) Resource Consenting 1,401 1,428 27 2,660 2,708 49 Building Policy 1,660 1,008 (652) 2,388 1,637 (751) Land & Property Information Services 148 282 135 217 571 354 Regulatory Services (580) (5,005) (4,425) 6,313 449 (5,864) Road Network 31,175 34,404 3,229 68,497 69,842 1,345 Active Travel 6,498 7,304 807 15,099 15,599 500 Parking 385 627 242 534 1,026 492 Public Transport Infrastructure 894 1,130 236 2,095 2,079 (17) Capital Revenues (30,353) (56,749) (26,397) (122,224) (111,609) 10,615 Streets & Transport 8,599 (13,284) (21,883) (35,998) (23,063) 12,935 Wastewater Collection 44,043 40,988 (3,055) 62,762 53,972 (8,790) Wastewater Treatment & Disposal 6,483 8,040 1,558 13,318 15,956 2,638 Capital Revenues (67,044) (80,774) (13,730) (195,608) (161,547) 34,060 WW Collection & Treatment (16,518) (31,746) (15,227) (119,528) (91,620) 27,908 Water Supply 17,315 16,380 (936) 29,487 29,034 (453) Water Conservation 17 61 45 124 124 0 Capital Revenues (7,636) (28,172) (20,537) (40,844) (56,344) (15,500) Water Supply 9,696 (11,731) (21,428) (11,233) (27,186) (15,953) Groups of Activities 104,171 31,430 (72,741) 36,590 45,289 8,700 Corporate Revenues & Expenses (250,555) (191,776) 58,780 (383,670) (387,050) (3,380) ISP's & Eliminated Internals 2,323 1,243 (1,080) 4,350 (927) (5,277) Net Cost of Service (excl Vested) (144,061) (159,103) (15,042) (342,730) (342,687) 43 Misc P&L Unallocated 1 - (1) 1 0 (1) Vested Asset Income (10,313) (4,167) 6,146 (12,054) (5,917) 6,137 CCC Net Cost of Service (154,373) (163,269) (8,896) (354,782) (348,604) 6,179
Group of Activities Capital Programme
Year to Date Results Year End Forecast
$000's Actual Plan Variance Forecast Plan Variance Net C/F Overspend City Development 56 190 134 2,072 2,492 420 400 20 Community Support 547 6,952 6,405 2,463 10,515 8,052 2,322 5,730 Cultural and Learning Services 5,131 7,927 2,796 11,720 15,470 3,750 3,343 407 Democracy & Governance ------Economic Development 107 84 (24) 219 167 (52) (52) Parks & Open Spaces 4,591 12,494 7,903 34,857 44,573 9,716 9,821 (105) Recreation and Leisure 1,234 1,654 420 3,435 3,803 368 255 112 Refuse Minimisation & Disposal 363 572 209 1,074 1,153 79 - 79 Regulatory Services 5 14 9 96 94 (2) - (2) Streets & Transport 11,879 20,827 8,948 41,588 53,490 11,902 11,459 443 Wastewater Collection & Treatment 12,586 35,004 22,418 64,432 71,215 6,783 6,948 (165) Water Supply 6,941 12,175 5,234 20,795 25,687 4,892 5,320 (427) Corporate 7,314 9,128 1,814 21,104 42,967 21,862 18,659 3,204 Capital Works Programme 50,754 107,020 56,266 203,856 271,625 67,770 58,526 9,244 Earthquake Capital Expenditure 243,387 263,052 19,665 621,115 658,369 37,254 26,126 11,128 Equity Investments (134) - 134 (134) - 134 - 134 Planned Carry forwards - (89) (89) 334 (49,551) (49,885) (50,000) 115 Capital Programme 294,007 369,983 75,976 825,170 880,443 55,273 34,652 20,621 Capital Sales (305) - 305 (1,103) (1,205) (102) - (102) Vested Assets (including Rebuild) 10,313 4,167 (6,146) 12,054 5,917 (6,137) - (6,137) Net Total Capital 304,015 374,150 70,135 836,121 885,155 49,034 34,652 14,382
APPENDIX 3 TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 129
Appendix 3 - Capital Projects as at 31 December 2012 $000's
Net % Spend Forecast Proposed Variance Group Of YTD YTD of Total Total Current Year End Carry After Activities splay >$250k Project Title YTD Actual Budget Variance Budget Spend Budget Variance Forwards C/Fwds City Development Projects > $250k Urban Renewal 11 100 (89) 4.2% 267 264 3 0 3 Restricted Assets - Renew & Replacements (2) 45 (47) -0.1% 1,608 1,628 (20) 0 (20) Robert McDougall Building 47 45 2 7.8% 197 600 (403) 400 (3)
City Development Total 56 190 (134) 2.2% 2,072 2,492 (420) 400 (20)
Community Support Projects > $250k Housing Improvements / Remodelling 3 440 (437) 0.3% 550 987 (437) 0 (437) New Civil Defence Bldg (Emerg Ops Cntr) 0 0 0 0.0% 0 488 (488) 488 0 Halswell - new Suburban Community Cen 89 828 (739) 3.0% 1,123 2,958 (1,834) 1,834 0 Salvation Army Citadel property purchase 0 5,492 (5,492) 0.0% 0 5,492 (5,492) 0 (5,492)
Balance of programme 455 193 262 46.1% 789 591 198 0 198
Community Support Total 547 6,952 (6,405) 5.0% 2,463 10,515 (8,052) 2,322 (5,730)
Corporate Capital Projects > $250k Strategic Land Acquisitions 2,216 8,201 (5,985) 6.0% 19,800 37,158 (17,358) 17,358 0 IM&CT BusSolutions Delivery 0 58 (58) 0.0% (37) 724 (761) 0 (761) Fleet and Plant Asset Purchases 1,121 1,127 (6) 56.8% 1,800 1,973 (173) 0 (173) Corporate Property R&R 219 302 (82) 36.2% 605 443 162 0 162 IM&CT Renewals and Replacements 119 596 (477) 12.5% 837 950 (113) 0 (113) Capital Governance Group Pool 0 0 0 0.0% 0 2,888 (2,888) 0 (2,888) Asset Programme Rollout City Water&Waste 250 253 (2) 99.1% 250 253 (2) 0 (2) SLP Land Value Offset (4,534) (7,640) 3,106 -32.4% (14,008) (12,707) (1,301) 1,301 (0) Consents & Customer 4,864 2,472 2,392 77.2% 6,299 5,572 727 0 727 Mid level enhancement requests 1,743 1,325 418 79.5% 2,181 2,191 (10) 0 (10) CWW In-situ servers 316 496 (180) 63.7% 428 496 (68) 0 (68) Windows 2000 Server Upgrade 179 335 (156) 47.2% 259 380 (121) 0 (121) IM&CT Equipment Renewals and Replacement 349 754 (406) 20.8% 1,664 1,678 (13) 0 (13) Exchange Upgrade 1 280 (279) 0.4% 278 280 (2) 0 (2) Trim Upgrade 0 250 (250) 0.1% 249 250 (1) 0 (1) Security 254 0 254 100.0% 254 0 254 0 254
Balance of programme 216 319 (104) 25.1% 243 437 (194) 0 (194)
Corporate Capital Total 7,314 9,128 (1,814) 10.3% 21,104 42,967 (21,862) 18,659 (3,204)
Cultural and Learning Services Projects > $250k Content Capital Project 2,096 2,380 (285) 47.5% 4,124 4,408 (285) 0 (285) Library Built Asset Renewal & Replacemnt 123 291 (168) 17.6% 700 582 119 0 119 FA NA Collections Acquisitions 323 254 69 63.6% 508 508 (0) 0 (0) Aranui - New Library 1,817 2,177 (360) 83.5% 2,039 2,177 (138) 0 (138) Halswell - New Library 190 1,558 (1,368) 3.4% 2,164 5,507 (3,343) 3,343 0 Art in Public Places 157 643 (485) 12.2% 1,286 1,286 0 0 0 Library RFID Project 302 411 (109) 50.8% 591 594 (3) 0 (3)
Balance of programme 123 213 (90) 29.6% 308 408 (100) 0 (100)
Cultural and Learning Services Total 5,131 7,927 (2,796) 32.9% 11,720 15,470 (3,750) 3,343 (407)
Economic Development Balance of programme 107 84 24 49.1% 219 167 52 0 52
Economic Development Total 107 84 24 49.1% 219 167 52 0 52
Parks & Open Spaces Projects > $250k Neighbourhood Reserve Purchases 31 501 (470) 3.0% 1,018 1,001 17 0 17 District Sports Park Purchases 44 362 (318) 5.8% 768 724 44 0 44 Waterways & Wetlands Purchases 9 526 (517) 0.8% 1,055 1,051 4 0 4 Botanic Gardens Entry Pavilion 204 2,682 (2,478) 2.2% 4,006 9,067 (5,061) 5,061 0 Inner City Park Dev. 0 255 (255) 0.0% 510 510 0 0 0 Owaka & Awatea Green Corridor 3 7 (4) 0.5% 552 552 (0) 0 (0) Waterways Detention and Treatment Facili 0 0 0 0.0% 2,112 2,112 0 0 0 Lower Milns 441 870 (430) #DIV/0! 972 970 2 0 2 Sports Parks Tree Repl Prog 256 205 51 #DIV/0! 490 430 60 0 60 Washington Reserve 47 90 (43) 5.9% 137 800 (663) 663 0 Sport Parks - Buildings (R&R) 37 253 (215) 6.7% 167 555 (388) 0 (388) Open Water Systems - Box Drains (R&R) 0 130 (130) 0.0% 260 260 0 0 0 Open Water Systems - Unlined drains (R&R 0 166 (166) 0.0% 212 332 (120) 0 (120) Wharfs and Jetties (R&R) 231 275 (44) #DIV/0! 551 431 120 0 120 Shirley/Philpotts Drain 0 221 (221) 0.0% 442 442 0 0 0 Awatea South Basin 886 957 (71) 67.0% 1,321 1,322 (1) 0 (1) Kirkwood 1 25 (24) 0.2% 340 350 (10) 0 (10) Carrs Road S/W Facility 31 315 (285) 1.7% 1,780 1,770 10 0 10 Neighbourhood Parks - Structures (R&R) 189 111 79 28.8% 658 111 547 (428) 119 Quaiffes/Murphys Wetland 46 0 46 4.6% 1,002 1,000 2 0 2 Prestons/Clare Park 66 18 48 1.5% 94 4,500 (4,406) 4,400 (6) Owaka Basin 6 0 6 0.3% 2,100 2,100 0 0 0 New Cemetery Purchase 0 0 0 0.1% 500 500 0 0 0 Avon River 0 0 0 0.0% 6,400 6,400 0 0 0
Balance of programme 2,064 4,527 (2,463) 30.6% 7,408 7,282 126 126 251
Parks & Open Spaces Total 4,591 12,494 (7,903) 10.7% 34,857 44,573 (9,716) 9,821 105
Recreation and Leisure Projects > $250k Test Cricket 1,059 936 122 45.9% 2,052 2,307 (255) 255 0
Balance of programme 175 717 (542) 11.3% 1,384 1,496 (112) 0 (112)
Recreation and Leisure Total 1,234 1,654 (420) 32.0% 3,435 3,803 (368) 255 (112)
Refuse Minimisation & Disposal Projects > $250k Closed L'fill A'care Burwood Stg2C2D2E 73 185 (112) 18.9% 348 386 (38) 0 (38) Waste Transfer Stations and Bins (R&R 145 150 (5) 40.5% 326 357 (31) 0 (31)
Balance of programme 146 237 (91) 34.8% 401 411 (10) 0 (10)
Refuse Minimisation & Disposal Total 363 572 (209) 31.3% 1,074 1,153 (79) 0 (79)
Regulatory Services Balance of programme 5 14 (9) 5.2% 96 94 2 0 2
Regulatory Services Total 5 14 (9) 5.2% 96 94 2 0 2 APPENDIX 3 TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 130
Net % Spend Forecast Proposed Variance Group Of YTD YTD of Total Total Current Year End Carry After Activities splay >$250k Project Title YTD Actual Budget Variance Budget Spend Budget Variance Forwards C/Fwds Streets & Transport Projects > $250k FA RR Off Street Parking 0 150 (150) 0.0% 0 300 (300) 300 0 Carriageway Smoothing 0 400 (400) 0.0% 713 713 0 0 0 Footpath Resurfacing 151 550 (399) 13.4% 1,131 1,126 5 0 5 Subdivisions 306 528 (222) 23.8% 1,284 1,056 228 0 228 Retaining Walls Renewals 106 282 (176) 37.7% 282 282 0 0 0 Carriageway Sealing and Surfacing 1,053 2,300 (1,247) 23.9% 4,396 4,394 2 0 2 Road Pavement Replacement 103 640 (537) 7.1% 545 1,450 (905) 0 (905) Ferrymead Bridge 2,387 1,650 737 43.5% 5,487 5,247 240 0 240 Road Safety At Schools 2002/03 0 252 (252) 0.0% 252 252 0 0 0 Culvert Renewal 136 205 (69) 47.4% 287 205 82 0 82 Landscaping Renewals 10 54 (44) 2.1% 454 54 400 0 400 Traffic Signals Renewals 201 146 55 19.2% 1,046 1,046 0 0 0 New Grassed Berms 0 0 0 0.0% 311 311 0 0 0 Causeway Culvert & Walls 59 720 (661) 4.7% 1,254 913 341 0 341 Marshlands/Prestons 62 27 35 23.7% 252 260 (9) 0 (9) Main Rd 3 Laning 130 606 (476) 6.2% 201 2,106 (1,904) 1,904 0 BPDC road metalling 303 323 (21) 54.3% 557 557 0 0 0 Sthn Mway Cycleway & Auxiliaries 965 1,187 (222) 20.8% 3,315 4,644 (1,329) 0 (1,329) Street Tree Renewals 161 176 (15) 46.1% 160 350 (190) 0 (190) Hagley Crossings 5 173 (168) 1.9% 20 270 (250) 250 (0) Fitzgerald Ave Twin Bridges 2 318 (316) 0.3% 42 636 (594) 0 (594) Waimakariri Bridge 1 221 (220) 0.2% 141 443 (302) 300 (2) Tram Base 36 354 (318) 4.8% 742 707 35 0 35 Wigram Magdala Grade Separation 4,350 4,496 (146) 42.2% 4,887 10,314 (5,428) 5,428 0 K&C Renewal Contingency 0 0 0 0.0% 1,046 1,046 0 0 0 Greers/Northcote/Sawyers Arms 8 319 (311) 0.6% 119 1,319 (1,200) 1,200 0 Gardiners/Sawyers Arms Intersect 20 43 (23) 6.5% 141 311 (170) 170 0 Glandovy/Idris Intersect 21 27 (6) 4.4% 57 482 (425) 425 0 Canterbury Park Access 101 88 13 5.4% 1,471 1,870 (400) 400 0 University Crossings 67 295 (228) 6.2% 1,037 1,087 (50) 0 (50) Fairview St footbridge 42 131 (88) 16.1% 263 131 133 0 133 Aidenfield Drive Overbridge 187 521 (334) 7.8% 2,401 1,101 1,300 0 1,300 Carrs Rd Overbridge 52 60 (8) 6.5% 114 800 (686) 686 (0) Urgent Road Safety Contingency 5 30 (25) 1.6% 285 280 5 0 5 City Lanes / Blocks Land Purchases 0 0 0 0.0% 1,500 1,500 0 0 0 Road Lighting Renewals - Package 1 15 277 (262) 5.5% 277 277 0 0 0
Balance of programme 834 3,277 (2,444) 14.0% 5,115 5,647 (532) 397 (136)
Streets & Transport Total 11,879 20,827 (8,948) 21.0% 41,588 53,490 (11,902) 11,459 (443)
Wastewater Collection and Treatment Projects > $250k WW Infra R&R Wastewater Reticulation 10 193 (183) 1.8% 10 519 (509) 0 (509) WW Northern Relief & PS (PS 6,7,39,40,41 11 524 (513) 1.1% 11 1,047 (1,036) 0 (1,036) WW Wigram PM & PS 105 7,173 10,300 (3,127) 30.7% 23,328 22,306 1,022 0 1,022 WW New Mains Programme 3 0 3 0.3% 1,007 974 32 0 32 WW CWTP Allen Engines Replacement 479 777 (298) 61.4% 780 777 3 0 3 WW CWTP Biosolids Drying Facility 233 1,150 (917) 20.2% 1,123 1,150 (27) 0 (27) WW WI Future Stages 433 3,470 (3,037) 7.1% 6,133 4,257 1,877 0 1,877 WW Pumping Buildings & Civil R & R 3 65 (62) 0.7% 150 370 (220) 220 (0) WW CWTP Odour Containment 21 13 8 5.1% 221 403 (182) 182 (0) WW CWTP Improvements Unallocated 0 180 (180) 0.0% 359 359 0 0 0 WW Wainui Sewer Retic & WWTP 299 863 (564) 16.0% 1,863 863 1,000 (1,000) 0 WW Extension to Charteris Bay 78 1,160 (1,082) 1.6% 1,352 4,956 (3,604) 3,604 (0) WW Fendalton Duplication 2,288 4,185 (1,897) 38.3% 5,981 5,265 716 0 716 WW Wairakei Diversion 74 992 (918) 1.0% 3,603 7,508 (3,904) 3,904 0 Digestor 2-4 Refurb 1 0 1 0.3% 281 294 (13) 0 (13) WW Pump Scada System 63 657 (594) 9.3% 598 678 (80) 0 (80) CWTP Ongoing Renewals Programme 74 500 (426) 8.0% 909 928 (19) 0 (19) Enlarge Grit Tank & Sedimentation Tank I 0 40 (40) 0.0% 240 879 (638) 0 (638) Primary Sedimentatation Tank Upgrades 178 1,035 (857) 13.4% 1,254 1,328 (74) 0 (74) Carmen Rd sewer mains renewal 12 577 (565) 2.0% 577 577 (0) 0 (0) WW Pumping New Stns for Growth 176 54 123 24.0% 734 558 176 0 176 WW South West Area Growth 0 911 (911) 0.0% 2,922 2,396 525 0 525 Grit Tank Efficiency Improvements 0 0 0 0.0% 300 300 0 0 0 Electrical Renewals (balance) 2 268 (266) 0.4% 262 577 (315) 0 (315) Flare Upgrade 39 337 (298) 5.2% 722 745 (24) 0 (24) Backup Power Generator 97 861 (763) 11.3% 656 861 (204) 0 (204) WW Major Trunk Expansion (Inc SW) 0 2,661 (2,661) 0.0% 5,323 5,323 0 0 0 WW PS123 Awatea Pumping Station 165 200 (35) 33.1% 482 500 (18) 0 (18) Awatea Road Sewer Extension 0 525 (525) 0.0% 0 525 (525) 0 (525)
Balance of programme 675 2,508 (1,833) 16.6% 3,252 3,993 (741) 37 (704)
Wastewater Collection and Treatment Total 12,586 35,004 (22,418) 16.4% 64,432 71,215 (6,783) 6,948 165
Water Supply Projects > $250k WS New Connections 324 398 (74) 36.7% 643 882 (239) 0 (239) WS New Wells for Growth 0 262 (262) 0.0% 524 524 0 0 0 WS Mains Renewals 5 203 (198) 1.5% 5 368 (362) 0 (362) WS Wilmers Pump Station 2,924 2,400 524 51.5% 5,681 5,217 464 0 464 WS HWorks Land Purchase for Pump Station 2 359 (357) 0.5% 2 359 (357) 0 (357) WS - Palmers Rd P/Stn Renewal (204) 208 (412) -49.4% (204) 208 (412) 0 (412) WS Akaroa Water Upgrade 206 535 (329) 9.9% 669 2,087 (1,418) 1,418 0 WS Ferrymead Booster Station 443 541 (98) 81.4% 544 541 3 0 3 WS Charteris Bay Extention 105 400 (295) 5.6% 943 1,854 (911) 911 (0) WS R&R Submains Meter Renew 182 156 26 59.3% 307 275 32 0 32 WS NZDWS Upgrade Wainui 36 138 (102) 8.2% 441 138 303 0 303 WS Little River Increased Supply 151 1,000 (849) 5.6% 1,192 2,692 (1,500) 1,500 0 WS Crosbie Well Renewal 152 180 (29) 53.8% 282 280 3 0 3 WS St Johns New Well 12 142 (130) 4.2% 14 282 (268) 268 0 WS Cashmere Rd water mains renewal 300 408 (108) 73.3% 409 408 1 0 1 WS New Reservoirs (Growth) 0 320 (320) 0.0% 640 640 0 0 0 Victoria Reservoirs 2 & 3 Replacement 1,234 274 960 75.6% 1,632 274 1,358 0 1,358 NW NZDWS Compliance 86 0 86 7.3% 157 1,177 (1,020) 1,000 (20) WS NewHeadworksSecondaryStation (Growth) 0 311 (311) 0.0% 622 622 0 0 0 Water Res/Pump - New Plant 0 211 (211) 0.0% 423 423 0 0 0 Haslwell Junction frm Wilmers Road 19 777 (758) 1.5% 1,277 1,277 (0) 0 (0) WS Hills Road Pump Station 13 334 (322) 3.8% 334 334 (1) 0 (1) Farrington PS Well Replacements 223 320 (97) 27.9% 800 800 (0) 0 (0) Burnside PS Well Replacements 395 360 35 44.7% 884 880 4 0 4 WS - Trafalgar Well Renewals 3 106 (103) 0.7% 243 420 (177) 0 (177) WS Auburn PS Well Upgrade 0 88 (87) 0.1% 375 375 0 0 0
Balance of programme 332 1,742 (1,410) 13.4% 1,956 2,349 (393) 223 (171)
Water Supply Total 6,941 12,175 (5,234) 24.6% 20,795 25,687 (4,892) 5,320 427
Grand Total 50,754 107,020 (56,266) 16.4% 203,856 271,625 (67,770) 58,526 (9,244) APPENDIX 4 TO CLAUSE 4 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 131
Appendix 4 - Special Funds as at 31 December 2012
Housing Separately Funded Activity results to 31 December 2012
Annual Results Forecast Results $000's Act/YTD Plan/YTD Variance Forecast Plan Year Variance 1 July Opening Balance 29,311 29,311 - 29,311 29,311 -
Income 7,338 7,177 160 14,881 14,325 555 Expenditure (6,991) (7,752) 761 (12,543) (13,483) 940 Net Income 347 (575) 922 2,338 842 1,495
Less Loan principal repayments (4) (4) - (7) (7) - Less Capital expenditure (net) (437) (480) 43 (1,037) (1,097) 60
Plus Interest on fund balance 642 172 470 1,278 344 935
Housing Account Cash Balance 29,859 28,424 1,434 31,884 29,394 2,490
Loan balances 17 17 - 14 14 -
Social Housing is a separately funded activity; the cash balance of the Housing Development Fund is retained for future operating, renewal and replacement, and capital expenditure.
Christchurch Earthquake Mayoral Relief Fund as at 31 December 2012
Annual Results Forecast Results $000's Act/YTD Plan/YTD Variance Forecast Plan Year Variance 1 July Opening Balance 2,850 2,850 - 2,850 2,850 -
Contributions 38 - 38 38 - 38 Interest 61 - 61 92 - 92
Draw downs: Whitewings Charitable Trust (9) (9) - (9) (9) - Contemporary Circus Trust - (10) 10 (10) (10) - Ferrymead Park Ltd (14) (14) - (14) (14) - Habitat for Humanity - - - (60) (60) - Sydenham Park Complex (17) - (17) (17) (17) - Christchurch Worship Centre - - - (11) (11) - Training Ship Cornwell - - - (20) (20) - Mt Pleasant Oscar - - - (5) (5) - ParaFed Canterbury (10) - (10) (10) (10) - Barrington Tennis Club Inc - - - (15) (15) - Sumner Surf Life Saving Club - - - (100) (100) - Kahikatea Adventure Education Trust - - - (40) (40) - Avonside House Trust - - - (18) (18) - Shirley Community Trust - - - (6) (6) -
Earthquake Mayoral Relief Fund Balance 2,899 2,817 83 2,645 2,514 131 132 133
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
5. EARTHQUAKE FINANCIAL REPORT FOR DECEMBER 2012
General Manager responsible: Paul Anderson – General Manager, Corporate Services DDI: 941 8528 Officer responsible: Diane Brandish – Corporate Finance Manager Author: Bruce Moher – Planning and Reporting Manager
PURPOSE OF REPORT
1. This report updates the Corporate and Financial Committee on financial matters relating to the earthquakes as at 31 December 2012.
EXECUTIVE SUMMARY
2. Attached are appendices with brief notes of explanation showing summaries of:
Costs and recoveries for the three months to December 2012 and 2012/13 Forecast (Appendix 1) Earthquake life-to-date financial details (Appendix 2) Earthquake overall cost estimate (Appendix 3) Recoveries summary at 31 December 2012 (Appendix 4)
Summary Table
$ million December Quarter Forecast 2012/13 Actual Results Cost Recovery Net Cost Cost Recovery Net Cost Rebuild Costs 130.8 83.9 46.9 621.2 395.9 225.3 Emergency and Response costs 26.7 12.6 14.1 90.4 51.4 39.0 Total 157.5 96.4 61.0 711.6 447.4 264.3
Rebuild Costs
4. Costs of $130.8 million were recorded in the December quarter, of which $120.2 million related to work delivered by SCIRT. See appendix 1 for details.
5. Forecast rebuild expenditure for 2012/13 is $621.2 million, which is $37.3 million below this year’s budget. This is partly due to SCIRT’s current forecast varying from the Annual Plan figures which were based on the September 2011 estimate, and partly due to Facilities repairs progress. The variance comprises forecast under-spends on Water Supply ($43.2 million), Roading ($20 million), Pump Stations ($4.4 million) and Art Gallery ($17.5 million), and other facilities ($1.9 million), partially offset by over-spends on Wastewater ($48.1 million) and Stormwater ($1.6 million).
6. Of the 2012/13 forecast rebuild expenditure, $435.4 million relates to SCIRT costs (Wastewater Collection $266 million; Roading $119.7 million; Water Supply $26.3 million; and Stormwater $23.4 million). The balance relates to non-SCIRT (Council-delivered) works ($84.3 million) and Facilities ($99.1 million), in addition to $2.4 million of work paid for directly by the Christchurch Earthquake Appeal Trust.
Emergency and Response Costs
7. Costs of $26.7 million were incurred in the December quarter. This includes $12.7 million for the three waters temporary maintenance costs, $6.7 million for building assessments and repairs, $2.5 million for Rockfall and $1.7 million for Roading related work.
8. Forecast response costs of $90.4 million are $34.2 million higher than budget. This consists of Building assessment and repairs $14.7 million higher than budget (including Heritage Properties $5.4 million, Commercial Properties $1.7 million, Community Centres $1.8 million, Sporting Facilities $3.7 million, Libraries $1.5 million), infrastructure response costs $15.4 million, other response costs $2.7 million higher largely comprising claims preparation, and increased costs of working $1.4 million. 134
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
5 Cont’d
Recoveries
9. Forecast total recoveries are $25.2 million higher than plan this year. This comprises $25.7 million for response recoveries, largely due to, and partially offsetting the overspend detailed in paragraph eight. Forecast rebuild recoveries overall are very close to budget, with a number of variances largely reflecting the varying spend outlined in paragraph five.
10. During the period, the following monies were received:
LAPP Facilities – reimbursement from Riccarton Bush $0.38 million NZTA – rebuild – November claim $22.4 million
11. Accrued recoveries not received relating to DIA/CERA are $187.2 million. This is currently being funded by Council’s cash reserves and debt, as is the $147.5 million accrued relating to insurers.
Claims Status
12. A response claim totalling $31.2 million to 30 June 2012 have been lodged with Internal Affairs. Payment is expected in March. Claims from 1 July 2012 for response costs are handled by CERA. Of the LAPP infrastructure settlement, $18.7 million is still to be received, and there is $49.9 million outstanding from the LAPP facilities indemnity payment.
13. The status of increased costs of working claims is as follows:
Event ($000) Feb June Submitted to Insurer: (Actual cost to date) New Bus Exchange 928 Restart Car park 1,094 121 Tuam St conversion to office space 834 Temporary Library - Peterborough St 841 Temporary Library - South City Mall 95 Library storage - Brisbane Street 118 QE2 gym relocation 42 Southern Centre relocation 2 Temporary Library - Tuam St 375 Art Gallery temporary accommodation 183
Claims in progress: (Actual and estimated costs) South Library portable building hire 34 CWTP additional chemical usage 198 249 Corp Accom - temporary buildings 114 St Albans temp community centre 88
Identified projects to cover: (Forecast costs to 22/02/14) Temporary Library - Peterborough St 356 Central Library Tuam commitments 82 Brisbane Street storage rental 198 Art Gallery temp accom 62 Temporary Community Facilities 743 RBT temp accommodation costs 8 Linwood Library / SC setup 200
5,761 1,083
135
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
5 Cont’d
Building / Infrastructure Improvement Allowance
14. Of the $175 million Building / Infrastructure improvement allowance provided in the current financial strategy, $22.85 million has been allocated to date per the table below.
Description Meeting Value Date 25/08/201 Oxidation Ponds 1 16,128,000 08/09/201 Temporary Stadium cost contribution Rugby League Park 1 1,000,000 16/02/201 Fendalton Library and Service Centre 2 190,000 15/03/201 Linwood Community Arts Centre 2 35,884 05/04/201 Cowles Stadium 2 480,000 05/04/201 Pump Station 37 2 126,000 06/12/201 Owles Terrace Sewer Rebuild 2 270,000 06/12/201 Milton Street Frankleigh Street Sewer Repairs 2 736,000 06/12/201 Milton Street Frankleigh Street Sewer Upsizing 2 81,000 06/12/201 Colombo Street Diversion 2 928,000 06/12/201 Pump Station 15 Trunk Mains 2 2,879,000
The Major Community Facilities Rebuild Programme contained in the 2012/13 Annual Plan includes a further $79.3 million to be allocated in future years per the table below, leaving a balance of $72.8 million.
Art Gallery repairs 2012/14 12,400,000 Manchester and Lichfield Car Park 2013/14 13,000,000 Athletics Track Replacement 2013/14 2,100,000 Town Hall repairs 2014/16 51,300,000 Central Library repairs 2013/14 500,000
Do the Recommendations of this Report Align with 2009-19 LTCCP budgets?
15. Yes – there are none.
LEGAL CONSIDERATIONS
Have you considered the legal implications of the issue under consideration?
16. Yes – there are none.
ALIGNMENT WITH LTCCP AND ACTIVITY MANAGEMENT PLANS
17. Both service delivery and financial results are in direct alignment with the LTCCP as amended by the 2012/13 Annual Plan and Activity Management Plans.
Do the recommendations of this report support a level of service or project in the 2009-19 LTCCP?
18. As above.
136
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
5 Cont’d
ALIGNMENT WITH STRATEGIES
19. Not applicable.
CONSULTATION FULFILMENT
20. Not applicable.
STAFF RECOMMENDATION
That the Committee recommend to the Council that it receive the report. APPENDIX 1 TO CLAUSE 5 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 137
Appendix 1: Costs and recoveries for Oct to Dec 2012 and 2012/13 forecast
Cost ($m) Recoveries ($m) 2012/13 2012/13 2012/13 2012/13 Oct-Dec Variance Oct-Dec Variance Forecast Plan Forecast Plan
Infrastructure Rebuild: Roading 11.1 127.7 147.7 (20.0) 8.4 95.8 103.6 (7.8) Sewer 50.2 241.2 193.1 48.1 30.1 147.9 115.9 32.0 Water 1.3 38.9 82.1 (43.2) 1.1 23.7 52.0 (28.3) Stormwater 0.3 24.4 22.9 1.5 0.2 7.8 10.9 (3.1) SCIRT setup and overhead costs unallocated 48.9 (0.0) - (0.0) 29.4 (0.1) - (0.1) Total: 111.8 432.3 445.8 (13.5) 69.1 275.1 282.4 (7.3)
Other Assets and Insured Costs: ------Buildings and Facilities 1.4 104.5 123.9 (19.4) 1.5 57.5 61.3 (3.8) Housing 0.0 ------Sewer above-ground assets 11.1 53.1 66.1 (13.0) 9.5 45.1 43.1 2.0 Water above-ground assets 4.7 15.9 7.3 8.6 3.4 15.5 2.7 12.8 Stormwater above-ground assets 0.0 0.1 - 0.1 0.0 0.1 - 0.1 Uninsured Assets (Parks, Stormwater) 1.8 15.3 15.3 0.0 0.3 2.6 7.0 (4.3) Total: 19.0 188.9 212.6 (23.7) 14.8 120.9 114.1 6.8 Total Infrastructure Rebuild: 130.8 621.2 658.5 (37.3) 83.9 395.9 396.5 (0.5)
Emergency & Response Costs: ------Roading Emergency Work 1.4 1.4 - 1.4 (2.4) (0.9) (2.0) 1.1 Welfare and other Emergency Work 0.0 0.2 0.2 (0.1) (9.9) (9.8) (3.8) (6.0) Other Response Costs 1.4 10.5 7.8 2.7 7.6 13.1 11.4 1.7 Roading Temp Maintenance Works 0.3 7.0 8.6 (1.6) 0.8 4.3 5.5 (1.2) 3 Waters temp maintenance works 12.7 41.5 27.9 13.6 1.9 17.4 4.6 12.8 Buildings assessment and repair 6.3 16.2 1.6 14.7 5.5 14.7 1.2 13.5 Housing assessment and repair 0.4 1.3 - 1.3 0.4 1.3 - 1.3 Parks repairs 0.9 5.3 5.1 0.2 0.5 0.7 0.4 0.2 Demolition Costs 0.0 - - - 4.4 4.4 4.3 0.0 Rockfall 2.5 5.3 4.7 0.6 3.2 3.6 3.5 0.1 Increased Costs of Working 0.7 1.7 0.3 1.4 0.8 2.8 0.5 2.3 Total Emergency & Response Costs: 26.7 90.4 56.2 34.2 12.6 51.4 25.7 25.7 Grand Total 157.5 711.6 714.6 (3.0) 96.4 447.4 422.2 25.2
Notes:
1) Infrastructure forecasts based on information from SCIRT
APPENDIX 2 TO CLAUSE 5 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 138
Appendix 2: Life-to-date cost as at 31 December 2012
Life to Date ($m) Cost Accrued Recoveries Balance LAPP (F) LAPP (I) DIA/CERA NZTA Other Council Infrastructure Rebuild: Roading 26.4 - - - 19.8 0.0 6.6 Sewer 167.2 - 140.1 100.3 - - (73.2) Water 18.6 - 28.3 11.2 - - (20.8) Stormwater 16.4 - 13.4 10.0 - - (7.0) SCIRT setup and overhead costs unallocated 1 283.1 - - 84.9 84.9 - 113.2 Total 511.8 - 181.8 206.4 104.8 0.0 18.8 Other Assets and Insured Costs: Buildings and Facilities 2 13.1 98.3 - 0.0 - - (85.2) Housing 3 0.0 - - - - 19.8 (19.7) Sewer above-ground assets 35.3 34.5 - - - - 0.9 Water above-ground assets 17.8 17.3 - - 0.0 (0.0) 0.4 Stormwater above-ground assets 0.1 0.1 - - - - 0.0 Uninsured Assets (Parks, Stormwater) 6.8 0.8 - - 0.6 2.4 3.0 Total 73.2 151.0 - 0.0 0.6 22.2 (100.6) Total Infrastructure Rebuild: 585.0 151.0 181.8 206.4 105.3 22.2 (81.8) Emergency & Response Costs: Roading emergency works 96.5 - - 3.2 64.4 0.0 29.0 Welfare and other emergency works 67.6 - 1.3 54.0 - 0.0 12.4 Other Response costs 58.4 1.6 0.4 34.0 1.6 1.3 19.5 Roading temp maintenance works 32.4 - 0.0 0.6 22.1 (0.0) 9.7 3 Waters temp maintenance works 173.2 (0.5) 18.0 110.8 - 0.9 44.0 Buildings assessment and repair 35.3 31.7 - 0.6 0.1 1.9 0.9 Housing assessment and repair 2.5 - - 0.0 - 2.5 0.0 Parks repairs 4.0 0.6 - 0.6 - - 2.8 Demolition costs 10.6 - - 10.6 - 0.1 (0.1) Rockfall 23.7 - - 9.6 4.4 (0.0) 9.8 Increased costs of working 4 7.9 2.4 - 0.2 - 6.5 (1.2) Staff/Internal costs charged to Emergency/Response 48.4 - - - - - 48.4 Less costs budgeted in Council activities (37.5) - - - - - (37.5) Total Emergency & Response Costs: 523.2 35.8 19.7 224.1 92.6 13.2 137.7 Grand Total 1,108.1 186.9 201.5 430.5 198.0 35.4 55.9
Notes:
1) SCIRT setup and overhead costs will be allocated over infrastructure assets upon job completion.
2) Recoveries reflect LAPP (Facilities) interim building indemnity settlements and EQC payments.
3) Reflects EQC over cap interim payment received.
4) Other recoveries relate to additional tankered waste charges received.
APPENDIX 3 TO CLAUSE 5 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 139
Appendix 3: Overall cost estimate
Life forecast ($m) Cost Recoveries Balance LAPP LAPP DIA/CERA NZTA Other Council (F) (I) Infrastructure Rebuild NZTA-subsidised roading (excl State Highways) 633.7 - - - 526.0 - 107.7 Non-subsidised roading (excl State Highways) 124.1 - - - - - 124.1 Sewer 1,449.7 - 140.1 869.8 - - 439.8 Water 105.8 - 28.3 63.5 - - 14.1 Stormwater 335.1 - 13.4 201.0 - - 120.6 Total 2,648.5 - 181.8 1,134.4 526.0 - 806.3 Other Assets and Insured Costs: Buildings and Facilities 647.7 636.8 - - - - 10.9 Sewer above-ground assets 139.0 139.0 - - - - - Water above-ground assets 20.2 20.2 - - - - - Stormwater above-ground assets 2.2 2.2 - - - - - Council Buildings / Infrastructure - shortfall allowance 175.0 - - - - - 175.0 Uninsured Assets (Parks, Stormwater) 93.5 - - - - 5.8 87.7 Client Control Group Costs 14.0 - - 4.2 4.2 - 5.6 Insurance Excesses 29.5 - - - - - 29.5 Total 1,121.2 798.2 - 4.2 4.2 5.8 308.7 Total Infrastructure Rebuild: 3,769.6 798.2 181.8 1,138.6 530.2 5.8 1,115.0 Emergency & Response Costs: Roading Emergency Work 96.1 - - 3.2 64.4 .0 28.5 Welfare and other Emergency Work 67.6 - 1.3 54.0 - .0 12.3 Other Response Costs 50.0 1.0 .4 34.0 1.6 1.3 11.7 Roading Temp Maintenance Works 53.8 - .0 - 34.7 .0 19.1 3 Waters Temp Maintenance Works 281.2 - 18.0 154.2 - .9 108.0 Demolition Costs 10.6 - - 10.5 - .1 - Rockfall 84.3 - - 9.5 4.6 - 70.2 Increased Costs of Working 6.7 3.8 - .2 - - 2.7 Staff/Other internal costs charged to Emerg/Resp 10.9 - - - - - 10.9 Less costs budgeted in Council activities ------Total Emergency & Response Costs: 661.2 4.8 19.7 265.6 105.3 2.4 263.5 Grand Total 4,430.8 803.0 201.5 1,404.2 635.5 8.2 1,378.5 The cost estimate has been updated, and aligns with the Three-year Plan (TYP) to be considered by Council in February. It incorporates the SCIRT December cost update (updated for TYP inflation assumptions), updated facilities rebuild figures used in the TYP, and updated response cost and recovery estimates.
The main changes from the September earthquake report provided to Council are:
Infrastructure Rebuild cost estimate has increased by $741.2 million (net cost to Council $320.4 million) due to the December SCIRT cost estimate update. This saw Sewer and Stormwater cost estimates increase substantially, partly offset by a reduced Roading estimate.
Other Assets and Insured Costs estimate has increased by $237.1 million (net cost to Council $19.9 million). This is mainly associated with increased costs for facilities ($184.3 million), mainly due to incorporating the CCDU changes, and SCIRT cost estimate updates for above ground infrastructure.
Emergency & Response Costs net cost to Council has increased by $64.4 million (net cost to Council $33.5 million), mainly due to 3 Waters temporary maintenance works. This update was included in the December cost estimate Councillors received.
The overall impact is to increase the forecast net cost of the earthquakes to Council from $1,004.7 million reported in September to $1,378.5 million, an increase of $373.8 million.
The update Councillors received in December has a net cost estimate of $1,409.7 million, the current estimate is $31.2 million lower, mainly due to lower inflation rates used for the Three-year Plan than were in the SCIRT estimate. APPENDIX 4 TO CLAUSE 5 - CORPORATE AND FINANCIAL COMMITTEE - 8. 3. 2013 140
Appendix 4: Recoveries summary
Month ly recoveries summary rep ort as at 31/12/2012 $(m) All Figures are GST Exclusive
Total Crown NZTA LAPP (I) LAPP (F) EQC/Other Notes Rebuild
Cost incurred to date 585.0 Recoveries accrued 551.4 206.4 105.3 181.8 55.5 2.4 R ecoveries receiv ed 317.1 65.8 76.4 163.1 9.4 2.4 * Parks work paid for by ChCh Earthquake Appeal T rust Recoveries settled but unpaid 18.7 18.7
Balance unclaimed to date 215.6 140.6 29.0 - 46.0 -0.0
Significantly Damaged Buildings (Indemnity recovery claimed) Recoveries accrued 115.3 95.6 19.8 Recoveries received 65.4 45.7 19.8 Recoveries settled but unpaid 12.4 12.4 Claims in progress 37.5 37.5 0.0
Emergency and Response Cost incurred to date 552.7 Recoveries accrued 376.6 224.1 92.6 19.7 33.4 6.7 Recoveries received 292.3 177.2 90.7 19.7 0.5 4.1 Recoveries claimed but not settled 31.2 31.2 Balance unclaimed to date 53.1 15.7 1.9 - 32.9 2.6
In creased Co sts of Working Cost incurred to date 4.5 Excl Office Accom due to Civic Building net rental rebate Claims to be lodged (estimate) 2.4 2.4
141
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
6. EARTHQUAKE FINANCIAL REPORT FOR JANUARY 2013
General Manager responsible: Paul Anderson – General Manager, Corporate Services DDI: 941 8528 Officer responsible: Diane Brandish – Corporate Finance Manager Author: Bruce Moher – Planning and Reporting Manager
PURPOSE OF REPORT
1. This report updates the Corporate and Financial Committee on financial matters relating to the earthquakes as at 31 January 2013.
EXECUTIVE SUMMARY
2. Attached are appendices with brief notes of explanation showing summaries of:
Costs and recoveries for January 2013 and 2012/13 Forecast (Appendix 1) Earthquake life-to-date financial details (Appendix 2) Recoveries summary at 31 January 2013 (Appendix 3).
3. The estimated overall financial impact of the earthquakes on the Council of $1.378 billion has not changed from last month so the Total Cost Estimate table has not been included. This table will be re-included when updated information is available.
SUMMARY TABLE
$ million Current Month Forecast 2012/13 Actual Results Cost Recovery Net Cost Cost Recovery Net Cost Rebuild Costs 29.6 17.0 12.6 569.8 391.7 178.1 Emergency and Response costs 4.4 5.4 (1.0) 88.4 52.8 35.6 Total 33.9 22.3 11.6 658.2 444.5 213.7
REBUILD COSTS
4. Costs of $29.6 million were recorded in January, of which $27.2 million related to work delivered by SCIRT. $17.3 million related to Wastewater, $0.8 million to Water Supply, $2.4 million to Roading and $0.2m to Stormwater, with the remaining balance ($6.5m) being SCIRT work in progress yet to be allocated to specific assets.
5. Rebuild expenditure of $569.8 million is currently forecast for 2012/13, which is $84 million below this year’s budget and $51.4 million lower than that forecast in December. This is largely due to Rebuild strategic land acquisitions for major community facilities of $46.9 million now being forecast to occur in 2013/14. The SCIRT variance of $25.5 million comprises forecast under-spends on Water Supply ($43.2 million), Roading ($20 million), Pump Stations ($3.6 million), Stormwater ($2.4 million), partially offset by an over-spend on Wastewater ($43.7 million). The balance of the variance mainly relates to the facilities programme and forecast under-spends on the Art Gallery ($10.2 million) and Rebuild Strategic Land Acquisition ($46.9million).
6. Of the total forecast rebuild costs expenditure, $435.4 million relates to SCIRT costs (Wastewater Collection and pump stations $266 million; Roading $119.7 million; Water Supply and pump stations $26.3 million; and Stormwater $23.4 million). The balance relates to non-SCIRT (Council-delivered) works ($78.7 million) and Facilities ($53.3 million), in addition to $2.4 million of work paid for directly by the Christchurch Earthquake Appeal Trust.
EMERGENCY AND RESPONSE COSTS
7. Costs of $4.4 million were incurred in January. $1.4 million was due to water-related temporary maintenance costs, $1.9 million to building assessments and repairs (of which $1.7 million related to Heritage Properties) and $5 million to Roading emergency work. 142
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 6 Cont’d
8. Forecast response costs of $88.4 million are $27 million higher than budget. The over-spend mainly relates of facilities ($11.9 million), infrastructure ($11.2 million), ICOW ($4.3 million), and Geotech (-$0.5 million) following the transfer of $5.25 million of budget from the Rebuild relating to facilities repairs.
RECOVERIES
9. Forecast total earthquake recoveries are $21.5 million higher than budget this year. This comprises $22.5 million for response recoveries, largely due to, and partially offsetting the overspend detailed in paragraph 8. Forecast rebuild recoveries overall are $1.1 million below budget, with a number of variances largely reflecting the varying spend outlined in paragraph 5. Recoveries between CERA and NZTA have been updated to reflect the impact of the December rebuild cost estimate update.
10. During the period, the following monies were received:
CERA – Rebuild $114.3 million LAPP Facilities $1.0 million
The CERA payment reflects their estimated share of SCIRT costs from July 2012 to March 2013.
11. Accrued recoveries not received relating to DIA/CERA are $127.5 million. This is currently being funded by Council’s cash reserves and debt.
CLAIMS STATUS
12. Final response claims totalling $31.2 million to 30 June 2012 are with Internal Affairs, with payment expected in March. Future claims for response costs will be handled by CERA with a claim for the period July – December 2012 lodged this month for $16 million. Of the LAPP(I) settlement $18.7 million is still to be received and there is $49.9 million outstanding from the LAPP(F) indemnity payment. Council has sought clarification of the steps the LAPP trustees are taking to recover these amounts from their reinsurers.
13. The status of increased costs of working claims has not changed from the December report.
BUILDING / INFRASTRUCTURE IMPROVEMENT ALLOWANCE
14. There have been no further allocations from this allowance in January. A number of requests are being put to Council in February. Progress on the projects this allowance has been allocated to is reported monthly to Council in the Infrastructure Rebuild Report and the Facilities Rebuild Plan report.
Do the Recommendations of this Report Align with 2009-19 LTCCP budgets?
15. Yes – there are none.
LEGAL CONSIDERATIONS
Have you considered the legal implications of the issue under consideration?
16. Yes – there are none.
ALIGNMENT WITH LTCCP AND ACTIVITY MANAGEMENT PLANS
17. Both service delivery and financial results are in direct alignment with the LTCCP as amended by the 2012/13 Annual Plan and Activity Management Plans.
Do the recommendations of this report support a level of service or project in the 2009-19 LTCCP?
18. As above.
ALIGNMENT WITH STRATEGIES
19. Not applicable. 143
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
6 Cont’d
CONSULTATION FULFILMENT
20. Not applicable.
STAFF RECOMMENDATION
That the Committee recommend to the Council that it receive the report.
APPENDIX 1 CLAUSE 6 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013144
Appendix 1: Costs and recoveries for January 2013 and 2012/13 Forecast Cost ($m) Recovery ($m) Month 2012/13 2012/13 Variance Month 2012/13 2012/13 Variance
Forecast Plan Forecast Plan
Infrastructure Rebuild: Roading 2.6 127.7 147.7 (20.0) 0.2 94.1 103.6 (9.6) Sewer 15.2 241.2 193.1 48.1 9.1 147.9 115.9 32.0 Water 0.4 38.9 82.1 (43.2) 0.2 23.7 52.0 (28.3) Stormwater 0.2 24.5 22.9 1.5 0.1 7.9 10.9 (3.0) SCIRT setup and overhead costs unallocated 6.5 (0.0) - (0.0) 3.9 (0.1) - (0.1) Total: (1) 24.9 432.3 445.8 (13.5) 13.6 273.4 282.4 (9.0)
Other Assets and Insured Costs: Buildings and Facilities (2,3) 0.4 60.4 119.2 (58.8) 0.4 58.1 57.5 0.6 Housing 0.0 ------Sewer above-ground assets 3.5 49.8 66.5 (16.7) 3.5 42.9 43.1 (0.2) Water above-ground assets 0.6 16.0 7.3 8.7 (0.4) 14.6 2.7 11.9 Stormwater above-ground assets 0.0 0.1 - 0.1 0.0 0.1 - 0.1 Uninsured Assets (Parks, Stormwater) 0.1 11.3 15.3 (4.0) 0.0 2.7 7.0 (4.3) Total: 4.7 137.5 208.4 (70.8) 3.4 118.3 110.3 8.0 Total Infrastructure Rebuild: 29.6 569.8 654.2 (84.4) 17.0 391.7 392.7 (1.1)
Emergency & Response Costs: Roading Emergency Work 0.5 3.1 - 3.1 0.6 0.1 (2.0) 2.1 Welfare and other Emergency Work 0.0 0.2 0.2 (0.1) 0.0 (9.8) (3.8) (6.1) Other Response Costs 0.2 10.7 7.8 2.9 0.2 13.2 11.4 1.8 Roading Temp Maintenance Works 0.1 5.3 8.6 (3.3) 0.0 3.6 5.5 (1.9) 3 Waters temp maintenance works 1.4 39.4 27.9 11.5 1.8 17.0 4.6 12.4 Buildings assessment and repair (2) 1.9 16.6 6.1 10.5 2.5 15.8 5.1 10.7 Housing assessment and repair 0.0 1.4 - 1.4 0.0 1.3 - 1.3 Parks repairs 0.1 5.8 5.9 (0.0) 0.0 1.4 1.1 0.3 Demolition Costs - 0.0 - 0.0 - 4.4 4.3 0.0 Rockfall 0.0 4.2 4.7 (0.5) (0.1) 3.1 3.5 (0.4) Increased Costs of Working 0.1 1.7 0.3 1.4 0.3 2.7 0.5 2.2 Staff/Other internal costs charged to Emerg/Resp ------Less costs budgeted in Council activities ------Total Emergency & Response Costs: 4.4 88.4 61.4 27.0 5.4 52.8 30.3 22.5 Grand Total 33.9 658.2 715.6 (57.4) 22.3 444.5 423.0 21.5
Notes:
1) Forecasts based on information from SCIRT
2) $4.5m of budget (cost and associated recoveries) has been transferred from the facilities rebuild to cover building costs recorded as repairs.
3) Budget of $978,000 for consent mitigation works for treatment of EQ waste at Burwood Resource Recovery Park (access road realignment) and City Waste Treatment Plant (CWTP) has been assigned. This is fully offset by anticipated CERA contribution and fees revenue from targeted charges. Budget for a remaining $760,000 of cost will be offset by increased fees in the following four years to December 2016, and will be allocated following Council approval (report to Council in March). APPENDIX 2 TO CLAUSE 6 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 145
Appendix 2: Life-to-date cost as at January 2013
Life to Date ($m) Cost Accrued Recoveries Balance LAPP LAPP DIA/CERA NZTA Other Council (F) (I) Infrastructure Rebuild: Roading 29.0 - - - 20.0 0.0 9.0 Sewer 182.5 - 140.1 109.5 - - (67.1) Water 19.0 - 28.3 11.4 - - (20.7) Stormwater 16.6 - 13.4 10.1 - - (6.9) SCIRT setup and overhead costs unallocated 1) 289.6 - - 127.4 46.3 - 115.8 Total 536.6 - 181.8 258.4 66.4 0.0 30.1 Other Assets and Insured Costs: Buildings and Facilities 2) 13.6 98.7 - 0.0 - - (85.1) Housing 3) 0.0 - - - - 19.8 (19.7) Sewer above-ground assets 38.9 37.9 - - - - 1.0 Water above-ground assets 18.3 16.9 - - 0.0 (0.0) 1.5 Stormwater above-ground assets 0.1 0.0 - 0.1 - - 0.0 Uninsured Assets (Parks, Stormwater) 7.0 0.8 - - 0.6 2.4 3.1 Total 77.9 154.3 - 0.1 0.6 22.2 (99.3) Total Infrastructure Rebuild: 614.5 154.3 181.8 258.4 67.0 22.2 (69.2) Emergency & Response Costs: Roading emergency works 97.1 - - 3.2 65.0 0.0 28.9 Welfare and other emergency works 67.6 - 1.3 54.0 - 0.0 12.4 Other Response costs 58.7 1.7 0.4 34.0 1.6 1.4 19.6 Roading temp maintenance works 32.5 - 0.0 0.7 22.1 (0.0) 9.7 3 Waters temp maintenance works 174.6 0.4 18.0 111.7 - 0.9 43.6 Buildings assessment and repair 37.2 34.2 - 0.6 0.1 1.9 0.3 Housing assessment and repair 2.5 - - 0.0 - 2.5 0.0 Parks repairs 4.1 0.6 - 0.6 - 0.0 2.9 Demolition costs 10.6 - - 10.6 - 0.1 (0.1) Rockfall 23.8 - - 9.7 4.2 (0.0) 9.9 Increased costs of working 8.0 2.5 - 0.2 - 6.7 (1.4) Staff/Internal costs charged to Emergency/Response 48.4 - - - - - 48.4 Less costs budgeted in Council activities (37.5) - - - - - (37.5) Total Emergency & Response Costs: 527.5 39.4 19.7 225.2 93.0 13.4 136.7 Grand Total 1,142.1 193.7 201.5 483.7 160.0 35.6 67.6
Notes:
1) SCIRT setup and overhead costs will be allocated over infrastructure assets upon job completion.
2) Recoveries reflect LAPP (Facilities) interim building indemnity settlements and EQC payments.
3) Reflects EQC over cap interim payment received.
January 2013 APPENDIX 2 TO CLAUSE 6 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 146
Appendix 3: Recoveries Summary
M onth ly recoveries summary rep ort as at 31/01/2013 $(m) All Figures are GST Exclusive
Total Crown NZTA LAPP (I) LAPP (F) EQC/Other Notes Rebuild
Cost incurred to date 614.5 Recoveries accrued 568.4 258.4 67.0 181.8 58.8 2.4 Recoveries received 432.5 180.1 76.4 163.1 10.4 2.4 * Parks work paid for by ChCh Earthquake Appeal Trust Recoveries settled but unpaid 18.7 18.7 - Balance unclaimed to date 117.2 78.3 -9.4 - 48.3 -0.0
Significantly Damaged Buildings (Indemnity recovery claimed) Recoveries accrued 115.3 95.6 19.8 Recoveries received 65.4 45.7 19.8 Recoveries settled but unpaid 12.4 12.4 - Claims in progress 37.5 37.5 0.0
Emerg ency and Resp onse Cost incurred to date 557.0 Recoveries accrued 381.6 225 93.0 19.7 36.9 6.8 Recoveries received 291.1 176.0 90.7 19.7 0.5 4.1 Recoveries claimed but not settled 31.1 31.1 - - Balance unclaimed to date 59.5 18.1 2.3 - 36.4 2.7
In creased Co sts of W orking Cost incurred to date 4.6 Excl Office Accom due to Civic Building net rental rebate Claims to be lodged (estimate) 2.5 2.5
January 2013 2 APPENDIX 3 TO CLAUSE 6 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 147
Appendix 3: Recoveries Summary
M onth ly recoveries summary rep ort as at 31/01/2013 $(m) All Figures are GST Exclusive
Total Crown NZTA LAPP (I) LAPP (F) EQC/Other Notes Rebuild
Cost incurred to date 614.5 Recoveries accrued 568.4 258.4 67.0 181.8 58.8 2.4 Recoveries received 432.5 180.1 76.4 163.1 10.4 2.4 * Parks work paid for by ChCh Earthquake Appeal Trust Recoveries settled but unpaid 18.7 18.7 - Balance unclaimed to date 117.2 78.3 -9.4 - 48.3 -0.0
Significantly Damaged Buildings (Indemnity recovery claimed) Recoveries accrued 115.3 95.6 19.8 Recoveries received 65.4 45.7 19.8 Recoveries settled but unpaid 12.4 12.4 - Claims in progress 37.5 37.5 0.0
Emerg ency and Resp onse Cost incurred to date 557.0 Recoveries accrued 381.6 225 93.0 19.7 36.9 6.8 Recoveries received 291.1 176.0 90.7 19.7 0.5 4.1 Recoveries claimed but not settled 31.1 31.1 - - Balance unclaimed to date 59.5 18.1 2.3 - 36.4 2.7
In creased Co sts of W orking Cost incurred to date 4.6 Excl Office Accom due to Civic Building net rental rebate Claims to be lodged (estimate) 2.5 2.5
148 149
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
7. SALE OF EXISTING PRESCHOOL BUILDING TO BISHOPDALE COMMUNITY PRESCHOOL ASSOCIATION
General Manager responsible: General Manager Community Services, DDI 941-8528 Officer responsible: Acting City Housing & Community Facilities Manager Author: Steve McCarroll DDI 941-8581
PURPOSE OF REPORT
1. This report provides information on the earthquake and strengthening issues associated with the Bishopdale Community Preschool Building. It seeks approval from the Council to sell the Building, and grant a long term ground lease to the Bishopdale Community Preschool Association.
EXECUTIVE SUMMARY
2. At the Council meeting of 17 May 2012, in relation to a delegation from the Bishopdale Community Preschool, the Council resolved:
That staff report back to the Council on 7 June 2012 on the timeline for making the Bishopdale preschool building operational.
Council further resolved at their meeting of 7 June 2012:
(a) That the information in the report be received.
(b) Direct staff to continue to work with the insurer and the preschool on options to reopen the building.
3. The Bishopdale Community Preschool Association subsequently submitted a proposal to the Council to consider a sale of the Council owned building to the Preschool with a long term lease agreement for the land.
4. The proposal by the Preschool has been submitted on the basis that the Preschool will then work to earthquake strengthen the building or if this is not economically viable rebuild a new purpose built facility.
5. This report attends to the Council resolutions and deals with the Preschool Associations request to purchase the building and lease the land by seeking a Council resolution to support their proposal.
FINANCIAL IMPLICATIONS
6. Earthquake strengthening costs have been quantified at $297,270 excl GST. The Council also provides the Preschool with an annual grant through application to the Strengthening Communities fund. The amount of $40,000 has been provided for each of the last three financial years. Both of these costs will be avoided if a sale of the building to the Preschool proceeds. If the Council were to strengthen this building the funds would need to be requested from the Improvement/Betterment fund as part of an options paper to Council.
7. The Preschool currently leases the building from the Council and pays $45,000 per annum plus GST in rent.
8. A current market valuation of the building in its current condition has been assessed at $23,000 excluding GST
Do the Recommendations of this Report Align with 2009-19 LTCCP budgets?
9. No. Future LTP and Annual Plan processes will be informed on the outcome of this report.
150
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
7 Cont’d
LEGAL CONSIDERATIONS
10. The Legal Services Unit will be involved in the preparation of the sale and purchase documentation should the sale of the building proceed
Have you considered the legal implications of the issue under consideration?
11. As above
ALIGNMENT WITH LTCCP AND ACTIVITY MANAGEMENT PLANS
12. Aligns with page 45 LTCCP, participation in early childhood education.
Do the recommendations of this report support a level of service or project in the 2009-19 LTCCP?
13. As above
ALIGNMENT WITH STRATEGIES
14. Supports Councils commitment to Community Outcomes
Do the recommendations align with the Council’s strategies?
15. Yes, supporting a continuation of the service and benefits to the wider community and business owners in Bishopdale
CONSULTATION FULFILMENT
16. Bishopdale Preschool have been consulted with in regard to this proposal
STAFF RECOMMENDATION
That the Committee recommend to the Council that it resolve to:
(a) Sell the existing Bishopdale Preschool building to the Bishopdale Community Preschool for the nominal sum of $1.00.
(b) Grant the Bishopdale Community Preschool Association a long-term lease of the land they currently occupy.
(c) Delegate authority to the Corporate Support Manager to negotiate and conclude the sale and lease on terms and conditions she considers suitable.
This report is being considered by the Fendalton Waimari Community Board on 5 March and a recommendation from the Board will follow.
BACKGROUND (THE ISSUES)
17. The Bishopdale Community Preschool has leased the premises at 129 Farrington Ave, Bishopdale for over 30 years to provide the community with a low cost, not for profit early learning service for children 0-5 years old.
18. The Preschool was forced to close on 26th March 2012 following the results of a Detailed Engineering Evaluation (DEE) report completed which has assessed the building at less than 17% New Building Standard(NBS) and confirmed also that the building has a brittle collapse mechanism. 151
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
7 Cont’d
19. The Preschool reopened on the 16th July 2012 on a temporary site within an intermediate school classroom in the local area. The preschool has secured a lease for a one year period with the school with a one year right of renewal meaning the Preschool could potentially stay on this site until 1st May 2014.
20. In May 2012 the Council received an estimate for repairs to key damage, seismic strengthening and some maintenance improvements which totalled $297, 270 excl GST.
21. The Insurance position with regard to earthquake related damage is that following a site inspection on 19 November 2010 a minor level of “cosmetic” type damage was noted. Further inspections of the building did not reveal that the building had deteriorated further as a result of further earthquake events. The insurer’s position is that the low seismic capacity was due to pre-existing design and construction issues which pre-date the earthquake events. The recommendation from the Council’s insurance advisors AON is that the offer from the loss adjusters of $2056.00 excluding GST to repair the minor damage be accepted.
22. If Council was to retain ownership of the building with a view to relocating the Preschool back into the building, the earthquake strengthening work would need to be completed to comply with Council policy in bringing the building up to at least 67% NBS and also to comply with the Building Act.
23. Over the last seven years the Preschool have made capital improvements to the building to the value of approximately $230,000.
24. At the time of the closure the Preschool was operating at maximum capacity with a roll of 93 children from 74 families and 30 children were on the centre’s waitlist indicating the significant demand for the services of the Preschool. On the 17th May 2012 a 2000 signature submission was submitted to Council to reopen on this site as soon as possible.
25. The Preschool’s proposal outlines a plan that, with the support of the Council, will maintain and enhance early childhood support services in the Bishopdale Community and will enable the Council to avoid considerable cost in repairing the current site and facilities.
26. If the sale of the building to the Preschool proceeds they will be undertaking a detailed cost analysis of the two options of either strengthening the existing building or rebuilding. The Preschool’s management board can then make sound decisions about the future development of the preschool, secure a long term solution that retains the service within the community and develop funding proposals so that it can apply for funding assistance to complete the project. This will include funding options from several grants as well as funds from the Preschool’s own reserves which currently are in excess of $350,000.
27. The mechanism to ensure the earthquake strengthening work is completed, if a sale of the building was to occur, is Section 124 of the Building Act which gives the territorial authority the power to require strengthening work.
28. The proposal as outlined suggests this is a way forward that is of advantage to both the Council, the Bishopdale Community Preschool and the community in that it retains this vital service and has the potential to achieve this at very little cost to the Council
29. If the Preschool was to become operational again at this site there would be an increase in foot traffic in the Mall area generally with the corresponding benefits to the local business operators.
30. The Preschool sits on land that has been classified as a Local Purpose (Community Centre) Reserve. A lease for a maximum term of 33 years with or without a right of renewal may be granted under section 61(2)(a) of the Reserves Act 1977.
THE OBJECTIVES
31. To secure a long term future plan for the Preschool to ensure that the Bishopdale and wider community retains access to low cost not for profit early childhood education services. 152
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
7 Cont’d
THE OPTIONS
(a) Council retain ownership of the building and establish funding to undertake the earthquake repair and strengthening work to bring the building up to at least 34% NBS at a total estimated cost of $297,270 excl GST.
(b) Council sell the building for a nominal sum to the Bishopdale Preschool in its existing condition and grant them a long term lease of the land on terms and conditions yet to be determined.
THE PREFERRED OPTION
32. Sell the building to the Bishopdale Community Preschool in its current condition. This option saves the Council considerable repair and earthquake strengthening costs and secures a long term future plan for the Preschool to ensure that Bishopdale and the wider community retain access to low cost not for profit early childhood education services. It also provides a quicker solution than option A which effectively would see the property attended to in accordance with the Facilities Rebuild process and it’s associated priorities and timing.
ASSESSMENT OF OPTIONS
The Preferred Option
33. Sell the building to the Bishopdale Community Preschool for a nominal sum
Benefits (current and future) Costs (current and future) Social Preschool retain presence in Bishopdale NIL Community & Mall area Cultural Not applicable Not applicable
Environmental Proven organisation with 30 years presence in the area Economic Cost savings to Council Saving to Council on earthquake repairs. Lease of land at nominal rent Extent to which community outcomes are achieved:
Primary alignment with the community outcome of lifelong learning.
Also contributes to a city of inclusive and diverse communities
Impact on the Council’s capacity and responsibilities:
NIL
Effects on Maori:
NIL. Continuation of Service
Consistency with existing Council policies:
Supports the Council’s 2009/19 LTCCP
Views and preferences of persons affected or likely to have an interest:
Proposal for Council to sell the building has been put forward by Bishopdale Community Preschool and strongly supported by the local community.
Other relevant matters:
NIL 153
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
7 Cont’d
At Least one Other Option (or an explanation of why another option has not been considered)
34. Retain ownership of the Preschool building and undertake earthquake repairs
Benefits (current and future) Costs (current and future) Social Continues to provide early childhood Estimated at $342,000 education in Bishopdale Cultural N/A
Environmental Not the preferred option of the Bishopdale Preschool who wish to take ownership of their future Economic Nil benefits. Negative impact on Council’s Costs to repair building the budget if building retained responsibility of the Bishopdale Preschool Extent to which community outcomes are achieved:
Primary alignment with the community outcome of lifelong learning.
Also contributes to a city of inclusive and diverse communities
Impact on the Council’s capacity and responsibilities:
NIL
Effects on Maori:
NIL
Consistency with existing Council policies:
Supports the Council’s 2009/19 LTCCP
Views and preferences of persons affected or likely to have an interest:
Not the preferred option of the Bishopdale Community Preschool
Other relevant matters:
NIL
154 155
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
8. RICCARTON BUSH TRUST – APPOINTMENT OF TRUSTEES
General Manager responsible: General Manager Regulation and Democracy Services, DDI 941-8462 Officer responsible: Legal Services Unit Manager Author: Robert O’Connor, Senior Solicitor, Legal Services Unit
PURPOSE OF REPORT
1. This report seeks approval from the Council for appointments to the Board of Trustees of the Riccarton Bush Trust.
EXECUTIVE SUMMARY
2. Parliament recently enacted into law the Riccarton Bush Amendment Act 2012 (“the Amendment Act”), which, amongst other things, alters the number and composition of the board of trustees of the Riccarton Bush Trust.
3. Under the old repealed statutory provision, the Council was required to appoint six out of nine of the trustees, whereas the Amendment Act reduces the total number of board members to eight and requires the Council to appoint only five.
4. Under the Amendment Act, the term of office of the existing trustees expires on 13 May 2013 and accordingly new trustees must be appointed by that date.
5. The existing Council appointees to the board of the Riccarton Bush Trust are as follows:
Councillor Jimmy Chen Peter Laloli – Riccarton/Wigram Community Board Member Mike Mora – Riccarton/Wigram Community Board Chair Bob Shearing (former City Councillor) Pam Wilson (former heritage adviser with the NZ Historic Places Trust) Tony Gemmill (former Council employed community manager responsible for Riccarton House & Bush matters)
6. Council staff have consulted with the chairman of the Riccarton Bush Trust Board, Charles Deans, who in turn has consulted with the existing members of the board. Mr Deans has indicated that, for reasons of continuity, particularly related to earthquake rebuild issues, his preference is for the current board members to be re-appointed where possible. Bob Shearing has indicated that he is happy to retire from the board and the remaining existing Council appointees have indicated that they are available for re-appointment.
FINANCIAL IMPLICATIONS
7. There are no financial implications arising for the Council from the proposed appointments.
Do the Recommendations of this Report Align with 2009-19 LTCCP budgets?
8. Not applicable.
LEGAL CONSIDERATIONS
9. Section 5A(2) of the Riccarton Bush Amendment Act 1947 (as amended by the Amendment Act) provides that the term of office of existing Council appointees to the Riccarton Bush Trust expires on 13 May 2013. The Council is therefore required to make new appointments to the Board with effect from 14 May 2013.
10. Section 5 of the Riccarton Bush Amendment Act 1947 (as amended by the Amendment Act) provides that the Christchurch City Council must appoint five members of the Board as follows: 156
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
8 Cont’d
(a) three must be persons whom the Council decides to appoint;
(b) two must be elected members of a community board for either the community in which the Riccarton Bush is situated or an immediately adjacent community.
11. Board members appointed by the Council generally hold office for three years. However, appointees who are elected members hold office for the shorter of three years or the period during which he or she is an elected member.
Have you considered the legal implications of the issue under consideration?
12. Yes, see above.
ALIGNMENT WITH LTCCP AND ACTIVITY MANAGEMENT PLANS
13. Not applicable.
Do the recommendations of this report support a level of service or project in the 2009-19 LTCCP?
14. Not applicable.
ALIGNMENT WITH STRATEGIES
15. Yes.
Do the recommendations align with the Council’s strategies?
16. Yes.
CONSULTATION FULFILMENT
17. The Riccarton Bush Trust Board has been consulted through the Board Chair, Charles Deans.
STAFF RECOMMENDATION
That the Committee recommend to the Council that it appoint, with effect on 14 May 2013, the following persons to the Board of Trustees of the Riccarton Bush Trust:
(a) General appointments pursuant to section 5(2)(a) of the Riccarton Bush Amendment Act 1947:
(i) Councillor Jimmy Chen (ii) Pam Wilson (iii) Tony Gemmill.
(b) Community Board appointments pursuant to section 5(2)(b) of the Riccarton Bush Amendment Act 1947:
(i) Peter Laloli (ii) Mike Mora.
RICCARTON WIGRAM COMMUNITY BOARD RECOMMENDATION
That the Council adopt the staff recommendation.
157
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
9. 2012/13 HALF YEAR FINANCIAL STATEMENTS FOR CIVIC BUILDING LIMITED, VBASE LIMITED, TUAM LIMITED, WORLD BUSKERS’ FESTIVAL TRUST, CHRISTCHURCH AGENCY FOR ENERGY TRUST, ROD DONALD BANKS PENINSULA TRUST AND RICCARTON BUSH TRUST
General Manager responsible: General Manager Corporate Services, DDI 941-8528 Officer responsible: Corporate Finance Manager Author: Patricia Christie – External Reporting and Governance Manager
PURPOSE OF REPORT
1. This report presents for review the financial statements for the six months to 31 December 2012 of the Council Controlled Organisations (CCOs).
EXECUTIVE SUMMARY
2. The financial statements for the six months to 31 December 2012 from the following organisations are attached for information:
Civic Building Limited (Attachment 1) Vbase Limited (Attachment 2) Tuam Limited (Attachment 3) World Buskers’ Festival Trust (Attachment 4) Christchurch Agency for Energy Trust (Attachment 5) Rod Donald Banks Peninsula Trust (Attachment 6) Riccarton Bush Trust (Attachment 7).
3. The CCOs are required under section 66 of the Local Government Act 2002 to submit half year report within two months of the end of the first half of the financial year.
4. A half year report must contain the information required by an organisations statement of intent (SOI). For the above organisations this includes financial statements prepared in accordance with generally accepted accounting policies and New Zealand accounting standards.
5. All the above financial reports were approved by the respective boards of each organisation and provided to the Council prior to 28 February 2013.
ENTITY SUMMARIES
Civic Building Limited (CBL)
6. CBL is 100 per cent owned by the Council and is a joint partner along with Ngai Tahu Property in the Christchurch Civic Centre Joint Venture which was formed to develop and own the Civic Building.
7. CBL made a loss of $714,000 before tax compared to a before tax loss of $777,000 for the six months to 31 December 2011. Revenue and expenses were significantly lower in the six months to 31 December 2012 due to less insurance recoveries and earthquake repair expenses being recognised. This resulted in the reduced loss before tax.
8. The statement of financial position shows that CBL is in a net liability position. This is a result of the accounting treatment of the lease of the Civic Building and does not indicate that it is unable to meet its obligations as they fall due.
9. CBL’s net deficit before tax was better than its SOI targets for the six months to 31 December 2012. However, a large deferred tax movement combined with lower than expected tax losses due to $949,008 of 2012 insurance proceeds becoming taxable in 2013 has resulted in much higher than expected loss after tax. CBL’s capital structure and operational targets are in line with the SOI targets.
158
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
9 Cont’d
Vbase Limited (Vbase)
10. Vbase is 100 per cent owned by the Council and was set up to own and manage CBS Canterbury Arena, AMI Stadium (Lancaster Park), Christchurch Town Hall and the now demolished Convention Centre. Vbase has entered into an agreement to manage the new conference facilities at the Wigram Airforce Museum and is shortly to finalise a formal arrangement for the management of AMI Stadium (Addington).
11. Vbase made an operating loss (before interest expense, depreciation and tax) of $0.65 million compared with a $0.79 million operating loss for the six months to December 2011. While overall operating income has increased significantly when compared to the comparative period last year, so has expenditure. The two main contributors to the favourable revenue variance is larger event related revenue, and increased interest income generated from larger cash balances (from insurance recoveries and the JEFL sale). Event related expenses have increased relative to revenue while a fourfold increase in the material damage annual insurance premium for CBS Canterbury Area was the main contributor to the large increase in other expenses in the six months to December 2012.
12. The statement of financial position is not significantly different from the position at 30 June 2012. No further insurance recoveries have been accrued.
13. Vbase’s net deficit after tax and cash loss were better than the SOI target for the six months to 31 December 2012 as a result of more events than planned together with a lower than planned net interest cost. Vbase is currently not meeting its shareholders funds to total assets ratio and capital structure targets, its ability is achieve these is dependent on the overall profitability for the year. Vbase’s SOI sets rebuild targets. Currently these are not being met as for the six months to 31 December 2012 no significant costs have been incurred and ‘breaking ground’ on the repair and rebuild phase of the facilities is dependent on the finalisation of the insurance positions.
14. Vbase is performing well against its operational performance targets and is on track to meet its targets. However, its target to secure events that will attract national and international visitors to Christchurch and generate a positive economic impact which is measured by annual visitor spending exceeding $25 million has not been measured for the six months to 31 December. It is considered that the target will not be achieved as many of the events are locally based.
Tuam Limited
15. Tuam is 100 percent owned by the Council and owns land and buildings on Tuam Street including the former civic building. Tuam is currently negotiating with CCDU on the sale of these land and buildings.
16. Tuam made a loss before tax of $168,631 compared to a loss of $256,452 for the six months to 31 December 2011. The reduced loss is due to insurance recoveries which were not accrued in the result for the six months to 31 December 2011 as at that point the insurance recovery could not be accurately determined.
17. The statement of financial position is not significantly different from the position at 30 June 2012. The only insurance recoveries recognised relate to the expenses that have been incurred in investigating the damage to the Company’s buildings.
18. Tuam’s performance for the six months to 31 December 2012 was better than the targets in its SOI principally due to the additional car park lease income that it received. Tuam has also met its operational performance targets.
159
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
9 Cont’d
World Buskers’ Festival Trust (WBFT)
19. WBFT was established by Council to:
devise, manage and hold an annual buskers festival in Christchurch with a view to providing a national and international profile and identify for New Zealand street theatre; provide opportunities for local buskers to reach a wider audience; and provide a street theatre festival that is accessible to the public including the provision of free events and a commitment to maintain low ticket prices for performances where charges are made.
20. WBFT had a surplus of $414,280 compared with $506,979 for the six months to 31 December 2011. As the World Buskers Festival was held from 17 – 27 January 2013 the surplus does not represent the result of the festival. The nature of the festival is such that it is not possible to reliably estimate at 31 December the additional revenue and total expenses which the festival will generate.
21. The financial position is significantly improved from 30 June 2012 with net assets increasing from $86,662 to $500,942. As discussed above this is the result of the significant surplus at 31 December 2012.
22. Based on the financial results the WBFT has exceeded its financial performance targets for the six months to 31 December 2012. However, as the financial result includes much of the grant and sponsorship revenue but not the expenses that were likely to be incurred in running the festival the financial result is not a true reflection of the trust’s performance against its full year target. In terms of its operational targets that could be assessed prior to the festival being held it has met the target to deliver a programme at least the same size as the 2011 programme with 80 performers scheduled to perform compared to 60 in 2012.
Christchurch Agency for Energy Trust (CAfE)
23. CAfE was formed by the Council to:
raise awareness in Christchurch and promote energy efficiency initiatives and the use of renewable energy by providing information and advice to a wide range of parties encourage the use of renewable energy introduce initiatives to address the negative health and social impacts of fuel poverty and energy affordability issues in Christchurch.
24. CAfE had total comprehensive income for the six months of $819,640 compared to $246,624 for the six months to 31 December 2011. The surplus is a combination of increased revenues and lower than expected expenditure. The increased revenue was the result of all annual appointor contributions and project funding from Council being recognised in the first half of the year, other than ongoing project funding from EECA and bank interest no further income is expected to be received. Expenditure was lower due to delays in the completion of EnergyFirst projects and a number of projects beginning in the second half of the year.
25. The net assets of the Trust have increased from $928,339 on 30 June 2012 to $1,747,979 at 31 December 2012. The reason for this increase is an increase in the Trust’s trade and other receivables over the period representing the Council’s appointer and project funding which has been invoiced by the Trust but is yet to be paid.
26. CAfE has exceeded its financial performance targets for the six months to 31 December 2012 due to the recognition of all its annual appointor contributions and project funding in the first half of the year and lower than planned project expenditure. CAfE is on target to meet its operational performance targets by 30 June 2013. 160
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
9 Cont’d
Rod Donald Banks Peninsula Trust (RDBPT)
27. RDBPT was formed by the Council with the objective of promoting sustainable management and conservation of Banks Peninsula’s natural environment and associated recreation.
28. The six months to 31 December 2012 saw RDBPT invest in its first projects with grants of $122,500 being made. A memorandum of understanding has been signed with the Banks Peninsula Conservation Trust and one is under development with the Orton Bradley Park Trust.
29. RDBPT made a net loss of $62,675 compared to a profit for the six months to 31 December 2011 of $37,649. The RDBPT is not a profit making organisation, as such, a financial statement loss represents that its expenditure including the payment of grants exceeded its income for the period. If the payment of grants were excluded from the result RDBPT would have recorded a profit of $59,575, this increase on the profit for the six months to 31 December 2011 was the result of better interest investment rates.
30. RDBPT has exceeded its target operating surplus for the six months to 31 December 2012. In setting its SOI targets the trust has annualised its long term investment targets. For the six months to 31 December 2012 RDBT invested in $11,978 in annual minor projects and $115,000 in projects with an enduring legacy which is in line with the long term goal of investing 40 percent ($1,461,900) of its capital in such projects by June 2017. RDBPT is on target to meet its operational performance targets by 30 June 2013.
Riccarton Bush Trust
31. RBT was formed by an Act of Parliament in 1914. The Trust administers Riccarton House and its 5.41 hectares of grounds together with a 6.373 hectare native bush remnant gifted by the Deans family to the people of Canterbury.
32. The Riccarton Bush Amendment Act 2012 received Royal Assent on 12 November 2012 and is now law. The Act amends the funding structure of the RBT such that it can now levy Council the full amount that its financial plan specifies that the Council must pay for RBT’s operating budget. The amount levied by RBT is subject to negotiation with the Council as part of the Council’s approval of the RBT financial plans or if there are considered to be departures from their financial plans.
33. Part of Riccarton House is currently closed for earthquake repairs which are expected to be completed on 23 December 2013. Together with the repair of the House strengthening work is being undertaken to bring it up to 67 percent of new building standards.
34. RBT made a surplus of $162,833 compared to a surplus of $38,337 for the six months to 31 December 2011. The increased surplus is the result of receiving a grant of $127,000 from the Christchurch Earthquake Appeal Trust to assist with the cost of earthquake strengthening Riccarton House.
35. The statement of financial position is not significantly different from the position at 30 June 2012.
36. RBT has exceeded in financial targets for the six months to 31 December 2012 due to the receipt of additional grant funding ($127,000) provided by Christchurch Earthquake Appeal Trust which was not budgeted for, along with tight control expenditure. RBT is on target to meet most of its operational performance targets by 30 June 2013. However, a number of targets related to the completion of the repairs to Riccarton House could be delayed by the repairs. The target to have the Draft Management Plan available for public consultation by December 2012 has not been met, preliminary work has begun but the plan has been delayed by earthquake recovery related priorities. RBT has also been unable to meet its target to have five juvenile Great Spotted Kiwi crèched in Riccarton Bush during the 2012 Winter/Spring due to a review by DOC of the programme which resulted in no kiwi being placed in the Bush.
161
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
9 Cont’d
FINANCIAL IMPLICATIONS
37. None.
LEGAL CONSIDERATIONS
38. CCOs are required under section 66 of the Local Government Act 2002 to submit half year reports to Council within two months of the end of the first half of the financial year. In the case of these organisations the half year reports were required to be with Council by 28 February 2013. All half year reports were signed and provided to Council by 28 February 2013.
STAFF RECOMMENDATION
That the Committee recommended to the Council that it receive the half-year reports for the following Council Controlled Organisations:
Civic Building Limited Vbase Limited Tuam Limited World Buskers’ Festival Trust Christchurch Agency for Energy Trust Rod Donald Banks Peninsula Trust Riccarton Bush Trust.
ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 162
Civic Building Ltd
Unaudited Half Year Financial Statements to 31 December 2012
ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 163
Background
These are the unaudited interim financial statements of Civic Building Limited (“the Company”).
The Company is a Council Controlled Trading Organisation as defined by Section 6 of the Local Government Act 2002. Accordingly, the Company has designated itself as a profit oriented entity for the purposes of New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS).
The Company is a party along with Ngai Tahu Property (CCC-JV) Limited to the Christchurch Civic Building Joint Venture an unincorporated joint venture which has developed and now maintains the Christchurch City Council’s Civic Building in Hereford Street.
The financial statements of the Company are for the 6 months ended 31 December 2012. The financial statements were authorised for issue by the Board of Directors on 25 February 2013.
Directors
The persons holding office as Directors of the Company for the year to date and at 31 December 2012 were:
R Parker N Button J T Gough
State of Affairs
For the six months ended 31 December 2012, the Company made a net loss before tax of $714,000 (for the six months to 31 December 2011 a loss of $777,000). The reduced loss is due to the impact of earthquake recoveries and associated expenses for the six months to 31 December 2011. While there is a reduced before tax loss in 2012, revenue and expenses are significantly lower due to less insurance recoveries and earthquake repair expenses being recognised. ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 164
Statement of Comprehensive Income for the six months ended 31 December 2012
Dec 12 Dec 11 YTD Actual YTD Actual $000 $000
Revenue 2,499 6,523
Finance costs 2,722 2,752 Other expenses 491 4,548
3,213 7,300
Profit/(loss) before tax expense (714) (777)
Income tax expense/(income) 66 (731)
Profit/(loss) for the period (780) (46)
Other comprehensive income ‐ ‐
Total comprehensive income (780) (46)
The accompanying notes form part of and are to be read in conjunction with these financial statements.
ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 165
Civic Building Limited
Statement of Changes in Equity for the six months ended 31 December 2012
Share Retained Capital Earnings Total $000 $000 $000
Balance at 1 July 2011 6,188 (12,508) (6,320)
Comprehensive income for the 6 months to 31 December 2011 ‐ (46) (46) ‐ Balance at 31 December 2011 6,188 (12,554) (6,366)
Comprehensive income for the 6 months to 30 June 2012 ‐ 1,380 1,380
Balance at 30 June 2012 6,188 (11,174) (4,986)
Comprehensive income for the 6 months to 31 December 2012 ‐ (780) (780)
Balance at 31 December 2012 6,188 (11,954) (5,766)
The accompanying notes form part of and are to be read in conjunction with these financial statements.
ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 166 ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 167
Cashflow Statement for the 6 months ended 31 December 2012
Dec 12 Dec 11 YTD Actual YTD Actual $000 $000
Cashflows from operating activities Operating Revenue 2,559 474 Insurance proceeds received (46) 4,302 Payments to suppliers and employees (1,037) (738) Payments for remedial works regarding earthquake claim (189) (4,452) Income tax received (paid) ‐ 378 Net GST movement 82 (28) Net cash provided by / (used in) operating activities 1,369 (64)
Cashflows from operating activities Interest received 42 72 Payment for investment property ‐ (103) Purchase / maturity of deposits ‐ 16 Net cash provided by /(used in) investing activities 42 (15)
Cashflows from financing activities Interest paid (2,717) (2,737) Net cash provided by /(used in) financing activities (2,717) (2,737)
Net increase in cash and cash equivalents (1,306) (2,816)
Cash and cash equivalents at beginning of period 4,601 5,196
Cash and cash equivalents at end of period 3,295 2,380
The accompanying notes form part of and are to be read in conjunction with these financial statements.
ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 168
Notes to the interim financial statements
Statement of Compliance
The interim financial statements for the six months ended 31 December 2012 have been prepared in accordance with NZ IAS 34 Interim Financial Reporting and New Zealand generally accepted accounting practice.
The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual financial statements as at 30 June 2012.
Accounting policies
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 30 June 2012.
Contingencies
The Company disclosed in Note 13 of the annual report that it had no contingent assets or liabilities for the year ended 30 June 2012, this is also the position at 31 December 2012.
Events subsequent to balance date
There were no significant events subsequent to balance date requiring disclosure up to the date of authorisation of these financial statements.
ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 169
Statement of Service Performance
The following lists the financial and operating performance targets set by the Company in its Statement of Intent for the year to 30 June 2013 and reports on progress to date against these targets.
Dec 12 Dec 12 Dec 12 Full year Target Actual Variance Target $000 $000 $000 $000
Financial Performance Targets: Income Rental Income 2,031 2,028 (3) 4,061 Other Income 425 471 46 849 Expenses Interest 2,730 2,722 8 5,459 Other Expenses 530 433 97 1,059
Net Surplus (Deficit) Before Tax (804) (656) 148 (1,608) Taxation (576) 66 (642) (1,152) Net Surplus After Tax (228) (722) 790 (456)
Ratio of Shareholders Funds to Total Assets ‐12% ‐9% 3% ‐12%
Dec 12 Dec 12 Dec 12 Full year Target Actual Variance Target $million $million $million $million Capital Structure Uncalled Capital 10.0 10.0 ‐ 10.0 RPS Shares 6.2 6.0 (0.2) 6.2 Debt 59.2 59.3 0.1 59.2 Total Assets 61.0 62.7 1.7 61.0
Variances: Rental income and interest paid were both slightly lower than expected. Other income is higher than expected due to interest received and operating expenses on-charged to the tenant both being higher than expected.
Other expenses are lower than expected due to the target including management costs. The Company has yet to finalise a management services agreement with Christchurch City Council but expects this to be finalised prior to 30 June 2013 and a charge will be recognised in the annual financial statements.
The income tax charge is significantly different due to a large deferred tax movement in the six months to 31 December combined with less tax losses than planned. Tax losses were reduced as a result of $949,008 of insurance income received in the year to 30 June 2012 becoming taxable in the 6 months to 31 December 2012.
ATTACHMENT 1 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 170
Civic Building Limited
Operational Performance Targets
Objective and Strategy Performance Measure 2012/13 Performance to date
Meet the financial targets contained Budgeted key performance indicators Financial targets are in line with the SOI within this SOI are met or exceeded targets
Manage the investment in a Ensure the Civic building is managed in The building has been managed in commercially astute and prudent accordance with the management accordance with the management manner. agreement. agreement.
Environmental and Social Performance Targets
Objective and Strategy Performance Measure 2012/13 Performance to date
The Civic Building was designed to Ensure the Civic Building operates in a The building is operating in a manner achieve a high standard in terms of manner that preserves Green Star 6 considered necessary to maintain its 6 environmental and energy sustainability. accreditation features. Green Star accreditation.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 171
VBASE LIMITED
Unaudited Financial Statements
to 31 December 2012
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 172
Vbase Limited Half Yearly report to 31 December 2012
Nature of Business
These are the unaudited interim financial statements for the six months to 31 December 2012 of VBase Limited.
Vbase Limited (the ‘Company’) is a 100% subsidiary of the Christchurch City Council (‘Council’). The Council has entrusted the Company with ownership and management of the four premier entertainment and event venues – AMI Stadium (Lancaster Park), Christchurch Town Hall for Performing Arts, Christchurch Convention Centre and the CBS Canterbury Arena.
Directors
The persons holding office as Directors of the Company for the year to date and at 31 December 2012 were:
Robert Parker (Chairman) Ngaire Button James Gough Tony Marryatt
State of Affairs
Operations
The Company recorded an operating loss (before interest expense, depreciation and tax) of $0.65 million compared with a $0.79 million operating loss for the six months to December 2011. While overall operating income has increased significantly when compared to the comparative period last year, so has expenditure. The two main contributors to the favourable revenue variance is larger event related revenue and increased interest income generated from larger cash balances (from insurance recoveries and the JEFL sale) placed in term deposits in the 2012 period. Event related expenses have increased relative to revenue while a fourfold increase in the material damage annual insurance premium for CBS Canterbury Area was the main contributor to the large increase in other expenses in the six months to December 2012.
Earthquake
Three of the four premier entertainment and event venues which the Company owns and manages were severely damaged during the 2010/11 Canterbury earthquakes with CBS Canterbury Arena the only venue operating at full capacity since February 2011.
The Christchurch Convention Centre has been demolished and the Company is in discussions with its insurers on the repair of the Town Hall and the future of AMI Stadium (Lancaster Park).
The Company fully impaired the value of the Town Hall and AMI Stadium (Lancaster Park) at 30 June 2012 and wrote off the Convention Centre building in the 2011 financial year and as a result the Company’s fixed assets balance comprises the value of the Convention Centre land at 30 June 2012 and the market value of the CBS Canterbury Arena building.
The Company has business interruption insurance cover for revenues lost as a result of the earthquakes for a maximum period of two years from the date of the February 2011 earthquake event. The Company is still negotiating the settlement of claims submitted under this policy.
The Company has obtained insurance cover for the CBS Canterbury Arena for the 2012/13 year.
As at June 2012 the Company recognised insurance recoveries of $166.6 million. No further insurance recoveries have been recognised.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 173
Vbase Limited Statement of Comprehensive income For the six months ended 31 December 2012
Dec-12 Dec-11 Actual Actual $000 $000 Rendering services 4,836 3,565 Interest revenue 1,093 361 Other revenue 876 848 Total Revenue 6,805 4,774
Food and Beverage expenses 4,507 3,099 Other expenses 2,948 2,057 Total Other expenses 7,455 5,156
Employee benefit costs - 404
Profit / (loss) before depreciation, finance costs and income tax expense (650) (786)
Depreciation and amortisation 1,911 3,559 Finance costs 1,251 1,253 Profit / (loss) before income tax expense (3,812) (5,598)
Income tax (expense) / income - 1,929
Profit / (loss) for the period (3,812) (3,669)
Other comprehensive income --
Total comprehensive income (3,812) (3,669)
The accompanying accounting policies and notes form part of these financial statements.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 174
Vbase Limited Statement of Changes in Equity for the six months ended 31 December 2012
Share Other Retained Capital Reserves Earnings Total $000 $000 $000 $000
B alance at 1 Ju ly 2011 184,715 15,085 (49,026) 150,774 Comprehensive income for 6 months to 31 Dec 2011 - - (3,669) (3,669) Issue of Preference Shares 9,000 - - 9,000
Balance at 31 December 2011 193,715 15,085 (52,695) 156,105
Comprehensive income for 6 months to 30 Jun 2012 - - 90,591 90,591 Net movement in property valuations - (19,953) - (19,953) Deferred tax adjustment on property revaluation - 4,868 - 4,868 Equity component of mandatory RPS (896) - 896 -
Balance at 30 June 2012 192,819 - 38,792 231,611
Comprehensive income for 6 months to 31 Dec 2012 - - (3,812) (3,812)
Balance at 31 December 2012 192,819 - 34,980 227,799
The accompanying accounting policies and notes form part of these financial statements.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 175 ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 176
Vbase Limited Statement of Cashflows for the six months ended 31 December 2012
Dec-12 Jun-12 $000 $000 Cash flows from operating activities Receipts from customers 6,857 8,537 Receipts from insurance 26,512 5,768 Subvention receipt - 4,569 Payments to suppliers and employees (9,343) (14,188) Taxation (Paid) / Received - 4 Net GST movement 131 (453) 24,157 4,237
Net cash from/(used in) investing activities Proceeds from sale of investments - 9,864 Sale/Purchase of fixed assets (746) (5,273) Purchase of investments (36,637) (27,450) Interest income received 1,514 382 Dividend received - 4,433 Maturity of Investments 23,025 20,306 (12,844) 2,262
Cash Flows from Financing Activities Proceeds from issues of equity securities - 9,000 Interest paid and other financing costs (1,264) (3,216) Net Cash Inflow/(Outflow) from Financing Activities (1,264) 5,784
Net inflow/(outflow) of cash 10,049 12,283 Opening bank 19,244 6,961 Closing bank 29,293 19,244
Represented by: Cash and cash equivalents 29,293 19,244
The accompanying accounting policies and notes form part of these financial statements.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 177
Vbase Limited Notes to the interim financial statements
Statement of Compliance
The unaudited interim financial statements for the six months ended 31 December 2012 have been prepared in accordance with NZ IAS 34 Interim Financial Reporting and New Zealand generally accepted accounting practice.
The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual financial statements as at 30 June 2012.
Accounting policies
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Company’s annual financial statements for the year ended 30 June 2012.
Contingencies
The contingencies of the Company are disclosed in Note 23 of the annual report for the year ended 30 June 2012 and are materially the same as at 31 December 2012.
Events subsequent to balance date
There were no significant events subsequent to balance date requiring disclosure up to the date of authorisation of these financial statements.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 178
Vbase Limited Statement of Service Performance
The following lists the financial and operating performance targets set by the Company in its Statement of Intent for the year to 30 June 2013 and reports on progress to date against these targets.
31 Dec 2012 31 Dec 2012 31 Dec 2012 30 Jun e 2013 Actual Target Variance Target $000 $000 $000 $000 Income 5,712 4,809 904 9,617 Less: operati ng expenses 7,455 6,858 598 13,715 EBITDA (1,743) (2,049) 306 (4,098) Add: Interest received 1,093 875 218 1,948 Net insurance rec ov eries - (268) 268 4,805 Less: Interest expense 1,251 1,300 (49) 3,543 Depreci ation 1,911 1,773 139 3,545 Net (deficit) (3,812) (4,515) 703 (4,433)
Taxation including subv ention recei pts - - - (1,800) Net (deficit) after Tax (3,812) (4,515) 703 (2,633)
D epreciati on 1,911 1,773 139 3,545 Cash (loss)/gain (1,901) (2,742) 841 912
Both operating income and operating expenses were higher than forecast due to several large events occurring during the period that were not included in the forecast. While these events generated additional revenues they also result in increased costs during the period. One such event was the Super 15 finals series held at AMI Stadium (Addington).
Other items contributing towards a favourable income result were management fee revenue and expense on-charges for AMI Stadium (Addington).
The ratio of Shareholders funds to total assets is:
Target to Jun 2013 Actual to Dec 2012 75% 73%
The forecast capital structure is:
Target to Jun 2013 Actual to Dec 2012 $m $m Equity $249m $228m Debt $34m $34m Total assets $330m $314m
Achieving the Equity and Total assets targets is dependent on overall profitability of the Company for the year.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 179
Major facilities repair/rebuild
Forecast spend Ac t ua l S pe nd 2 Total 2012/13 2012/13 $m $m $ m Major Facilities Rebuild: Town Hall Repairs 127.5 2.0 0.2 Convention Cent re Replacement 220. 7 3. 0 0.0 A MI S tadium (Lancaster Park) Replacement 241. 5 4. 0 0.2 58 9. 7 9. 0 0 .4
Insurance Recoveries as per Annual Plan: Town Hall Repairs (68.9) 0.0 0.0 Convention Cent re Replacement (30. 6) 0. 0 0.0 A MI S tadium (Lancaster Park) Replacement (143. 0) (4. 0) 0.0 (242. 5) (4. 0) 0.0 Less 2.5% excess 6.1 0.2 0.0 Total recoveries net of excess (236. 4) (3. 8) 0.0
Balance requiring funding ¹ Town Hall Repairs 60.3 2.0 0.2 Convention Cent re Replacement 190. 8 3. 0 0.0 A MI S tadium (Lancaster Park) Replacement 102. 2 0. 2 0.2 35 3. 3 5. 2 0 .4
Notes
1 The source of funding has not been finalised at the time of writing this document. As detailed in the Christchurch City Council 2012/13 Annual Plan, negotiations were underway with Central Government prior to the earthquake events for the government to contribute $70 million towards the construction of the Convention Centre. The balance of funding will be sourced either from Council or through external sources, such as, for example, a public private partnership.
2 The ‘actual spend’ column includes costs associated with the existing three facilities and any additional costs that have been incurred in relation to the rebuild/repair of these facilities.
For the six month period to 31 December 2012 no significant costs have been incurred in repairing the Town Hall or rebuilding the Convention Centre and AMI Stadium (Lancaster Park). ‘Breaking ground’ on the repair/rebuild phase of the major facilities is dependent on the finalisation of insurance settlements with the Company’s insurer.
ATTACHMENT 2 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 180
Operational Performance targets
Objective and Strategy Performance Measure Progress result as at 31 December 2012 2012/13
1 - Great Stages – Vbase will tailor a great stage for any event: • Maximise the number of events at At least 80 events are 66 events have been delivered at CBS Canterbury CBS Canterbury Arena. delivered at CBS Arena. On track to meet target. Canterbury Arena.
• Maximise the number of event days at At least 150 event days 122 event days as at 31 December 2012. On track to CBS Canterbury Arena. are delivered at CBS meet target. Canterbury Arena.
2 - Great Hosting – deliver an outstanding client and service experience: • Guest satisfaction with events delivered at Vbase venues (client Achieve greater than 80% The Company intends to have completed a client satisfaction survey). satisfaction during year. satisfaction survey by 30 June 2013.
3 - Growth – utilise assets and capabilities for growth: • Support the Christchurch City Vbase is part of project Vbase has agreed a Heads of Agreement to run the new Council in endeavours to increase team for new conference temporary conference facility at the Air Force Museum the available conference venues. venue development (AFM). Initially the contract is for the new area and the initiatives. cafe commencing mid February then the whole AFM premises from 1 July 2013.
Vbase played a significant part in delivering the Public Sector comparator for the new Convention Centre Precinct. Vbase is continuing to work with the CCDU and Council on the Convention Centre Precinct.
4 - Valuable Partnerships – great to do business with and a great place to work: • Secure events that will attract national and international visitors to Annual visitor spending Vbase has not analysed the annual visitor spend and Christchurch and generate positive exceeds $25 million. economic impact for the last six months. As many of our economic impact. events are locally based it is unlikely that the $25 million will be achieved.
• Secure events that will encourage Visitors to venues 138,458 visitors to 31 December 2012. On track to high usage of the venues. exceeds 240,000. achieve target.
• Facilitate access to the venues for Total venue discounts Flat floor discounts of $193,408 and local cultural local sporting, charitable and cultural exceed $300,000. discounts of $51,000 for the six months to 31 December organisations. 2012. On track to meet target.
ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 181 ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 182 ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 183 ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 184 ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 185 ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 186 ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 187 ATTACHMENT 3 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 188 ATTACHMENT 4 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 189
The World Buskers’ Festival Trust
Unaudited Half Year Report to 31 December 2012
ATTACHMENT 4 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 190
Background
These are the unaudited interim financial statements of The World Buskers’ Festival Trust (“the Trust”).
The Trust is registered as a Charitable Trust under the Charities Act 2005 and is domiciled in New Zealand. The company is a Council Controlled Trading Organisation as defined by Section 6 of the Local Government Act 2002 and created by the Christchurch City Council on 1 July 2010.
The primary purpose of the Trust is to hold an annual international buskers festival in Christchurch and apply surplus funds generated by the festival towards promoting street theatre as a performing art in New Zealand.
The financial statements of the Company are for the 6 months ended 31 December 2012. The financial statements were authorised for issue by the Board of Trustees on 28 February 2013.
Trustees
The persons holding office as Trustees for the 6 months ending 31 December 2012 were:
L Penno (Chair) (Resigned 3 December 2012) G Cranko (Deputy Chair) (Acting Chair from 3 December 2012) H Eskett (Resigned 3 December 2012) S Astor K Lowe (Resigned 3 December 2012)
State of Affairs
The Trust generated a surplus of $414,280 for the six months to 31 December 2012 compared to a surplus of $506,979 for the same period in 2011. As the World Buskers Festival was held from 17 – 27 January 2013 the surplus does not represent the result of the festival. The nature of the festival is such that it is not possible to reliably estimate at 31 December the additional revenue and expenses which the festival will generate. ATTACHMENT 4 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 191
The World Buskers’ Festival Trust
Statement of financial performance for the six months ended 31 December 2012
Dec 2012 Dec 2011 $$
Revenue from operations 854,924 800,820 Other income 62 - 854,986 800,820
Depreciation 299 - Other expenses 440,406 293,841 440,706 293,841
Net Surplus for period 414,280 506,979
Total Comprehensive Income 414,280 506,979
The accompanying notes form part of and are to be read in conjunction with these financial statements.
ATTACHMENT 4 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 192
The World Buskers’ Festival Trust
Statement of changes in equity for the six months ended 31 December 2012
$
Balance as at 1 July 2011 1,179
Comprehensive income for 6 months to 31 December 2011 506,979
Balance as at 31 December 2011 508,158
Comprehensive income for 6 months to 30 June 2012 (421,496)
Balance as at 30 June 2012 86,662
Comprehensive income for 6 months to 31 December 2012 414,280
Balance as at 31 December 2012 500,942
The accompanying notes form part of and are to be read in conjunction with these financial statements. ATTACHMENT 4 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 193 ATTACHMENT 4 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 194
The World Buskers’ Festival Trust
Notes to the interim financial statements
1. Statement of Compliance
The unaudited interim financial statements for the six months ended 31 December 2012 have been prepared in accordance with NZ IAS 34 Interim Financial Reporting and New Zealand generally accepted accounting practice.
The Trust is a qualifying entity within the Framework for Differential Reporting. The differential reporting option is available to the Trust as it is not large within the meaning of this term as set out in the Framework and is not publically accountable. The Trust has taken advantage of all differential reporting concessions available to it.
The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Trust’s annual financial statements as at 30 June 2012.
2. Accounting policies
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Trust’s annual financial statements for the year ended 30 June 2012.
3. Current assets
The cash and cash equivalents and trade and other receivables balance of $509,083 at 31 December 2012 includes grants and sponsorships received and receivable for the World Buskers Festival. These grants and sponsorships fund the cost of the Festival. As at 31 December 2012 it was not possible to reliably determine the total expenses yet to be incurred and as such no corresponding liability has been recognised. As described in note 4 – Contingencies below the Trust has a contingent liability at 31 December 2012 for these expenses.
4. Contingencies
The World Buskers’ Festival was held from 17 - 27 January 2013, the financial results for the 6 months to 31 December 2012 include the majority of the sponsorship revenue but not necessarily the associated expenses as these could not be measured reliability for accrual purposes at 31 December 2012. Therefore, a contingent liability exists for the expenses that will be incurred but could not be accurately measured at 31 December 2012.
5. Events subsequent to balance date
The World Buskers’ Festival was held from 17 – 27 January 2013 the nature of the Trust’s activities is such that the vast majority of the revenue and expenses of the Trust are related to the festival. The half year financial statements reflect the revenue and expenses to 31 December 2012, the 30 June 2013 financial statements will detail the full result.
ATTACHMENT 4 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 195
The World Buskers’ Festival Trust Financial Performance Targets from Statement of Intent
Dec 2012 Dec 2012 Dec 2012 2013 Target Actual Variance FY Target $$$ $
Revenue 907,500 854,986 (52,514) 1,815,000
Expenses 894,500 440,706 (453,794) 1,789,000
Surplus 13,000 414,280 401,280 26,000
Variances The variances as at 31 December may not be indicative of performance given the timing of the World Buskers’ Festival in late January.
Non-Financial Performance Targets
In addition to the above financial performance measures, the Trust set the following operational targets and measures in its Statement of Intent for the year 2012/13 financial year. Progress against these targets as at 31 December 2012 is detailed below:
Performance Target Performance Measure Actual Half Year Results
Visitor attendance Attract at least 300,000 visits. Yet to be assessed.
Customer satisfaction 90% of visitors are satisfied with the Yet to be assessed. festival.
Festival development Deliver programme at least the Achieved – 80 same size as the 2011 programme. performers in 2013 compared to 60 in 2012.
Generate surplus for future festival Yet to be assessed. development (refer financial targets).
ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 196 ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 197 ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 198 ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 199 ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 200 ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 201 ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 202 ATTACHMENT 5 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 203 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 204
Unaudited Half Year Report to 31 December 2012
ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 205
Background
These are the unaudited interim financial statements of the Rod Donald Banks Peninsula Trust (“RDBPT”).
The Trust was established on 12 July 2010 by the Christchurch City Council to honour the memory of Rod Donald and his commitment to Banks Peninsula and the Trust exists for the benefit of the present and future inhabitants of the Banks Peninsula and visitors to the region.
The Trust’s long term vision is to restore the Banks Peninsula to its traditional status as Te Pataka O Rakaihautu – the storehouse that nourishes. In pursuit of this vision the Trust promotes the sustainable management and conservation of the natural environment of the Banks Peninsula.
The financial statements of RDBPT are for the 6 months ended 31 December 2012. The financial statements were authorised for issued by the Trustees on 22 February 2013.
Trustees The persons holding office as Trustees of RDBPT for the year to date and at 31 December 2012 were:
G Moore (Chair) C Reid S Miller S Wright-stow T Korako N Shirlaw S Mortlock
State of Affairs
RDBPT has made good progress during the first half of the 2012-13 financial year , both furthering its objectives and on achievements related to the performance indicators in its Statement of Intent as detailed on pages 6 - 8.
A strategic planning workshop is scheduled for February 2013 to review and plan for further progress against the goals for this year, and define the goals for 2013-14.
The six months to 31 December 2012 saw the RDBPT invest in its first projects with grants of $122,500 being made.
The financial statements of RDBPT are for the 6 months ended 31 December 2012. For the 6 months to 31 December 2012, the trust made a net loss of $62,675 (for the 6 months to 31 December 2011 a profit of $37,649). The RDBPT is not a profit making organisation, as such, a financial statement loss represents that its expenditure including the payment of grants exceeded its income for the period. If the payment of grants were excluded from the result the trust would have recorded a profit of $59,575, this increase on the profit for the six months to 31 December 2011 is the result of better interest investment rates.
Page 2 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 206
Rod Donald Banks Peninsula Trust
Statement of Comprehensive Income for the six months ended 31 December 2012
Dec 2012 Dec 2011 $ $
Interest income 80,943 48,268 Total revenue 80,943 48,268
Grant payments 122,250 - Audit remuneration 450 - Other expenses 20,918 10,619 Total expenses 143,618 10,619
Net (Deficit)/Surplus for the year (62,675) 37,649
Other Comprehensive Income - -
Total Comprehensive Income (62,675) 37,649
The accompanying notes form part of these financial statements.
Page 3 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 207
Rod Donald Banks Peninsula Trust
Statement of Changes in Equity for the six months ended 31 December 2012
$
Balance as at 1 July 2011 3,565,010
Total comprehensive income for 6 months to 31 December 2011 37,649
Balance as at 31 December 2011 3,602,659
Total comprehensive income for 6 months to 30 June 2012 96,535
Balance as at 30 June 2012 3,699,194
Total comprehensive income for 6 months to 31 December 2012 (62,676)
Balance as at 31 December 2012 3,636,518
The accompanying notes form part of these financial statements.
Page 4 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 208
Rod Donald Banks Peninsula Trust
Balance Sheet as at 31 December 2012
Dec 2012 Jun 2012 $ $
Current assets Cash and cash equivalents 175,942 981,807 Trade and other receivables 24,128 70,387 Other financial assets - short-term deposits 2,150,000 1,500,000 Current tax assets 2,350,070 2,552,194
Non-current assets Other financial assets - long-term deposits 1,400,000 1,150,000 Property, plant and equipment 1,449 -
Total non-current assets 1,401,449 1,150,000
Total assets 3,751,519 3,702,194
Current liabilities Trade and other payables 115,000 3,000 Total current liabilities 115,000 3,000
Total liabilities 115,000 3,000
Net assets 3,636,519 3,699,194
Equity Retained earnings 3,636,519 3,699,194
Total equity 3,636,519 3,699,194
The accompanying notes form part of these financial statements.
For and on behalf of the Board of Trustees which authorised the issue of the financial statements:
______Trustee Trustee
______Date Date
Page 5 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 209
Rod Donald Banks Peninsula Trust
Progress against annual performance indicators
The following lists the performance indicators and achievement goals given in the Trust’s Statement of Intent covering the period July 2012 - June 2013 and reports on progress to 31 December 2012.
Non-financial Performance Targets
Indicator Achievement target Progress to date
Indicator 1 Inform the public and relevant Finalise a communications and Communications and advertising policy is interest groups about on-going advertising policy for the to be discussed at the Trust’s strategic activities and progress of the RDBPT. planning session in February 2013. Trust. Develop a branding for the Basic branding has been developed by Trust and a website that Kopara Creative. A briefing for the website enables easy upload of Trust has been developed and work to design documents for sharing. and construct it is in progress. The website go-live is scheduled for March 2013.
Share the report of the Stocktake The Stocktake report has been sent to project and on-going progress participants and some feedback received. with groups involved. The report will be uploaded to the website in March and progress reports made after that.
Indicator 2 Develop relationships with, Develop a list of key interest Relationships are now in place with two key and gain the trust of, existing groups that the RDBPT would groups, the Banks Peninsula Conservation interest groups on Banks like to work with. Trust (BPCT) and Orton Bradley Park Peninsula with aims aligned to (OBPT). An MOU is in place with the BPCT those of the RDBPT, along Continue to meet with key and under development with OBPT. Both with relevant government contacts within the groups to MOU’s provide for ongoing contact with the agencies and territorial discuss their projects and the Trust. authorities. manner in which the RDBPT can work with them. The Trust has also been appraised of the work of Wairewa runanga and is supportive of its projects and keen to be involved at the appropriate time.
Work to identify key groups will continue, including a walking strategy group.
Indicator 3 Invest the Trust fund Adopt the draft investment The Trust’s investment policy was prudently to minimise risk to policy and strategy for the accepted by Council with the 2012-13 the capital while achieving RDBPT. SOI. The funds have now been invested the aims of local and ethical in accordance with this policy. The investment. In the longer term operational expenditure is falling within ensure that the capital fund is the investment income. invested or spent in ways that leave a long term legacy for Identify other bodies which have The Trust has been working with DoC the people of the Peninsula funds available for projects Nature Heritage Fund on a property and visitors. Keep annual aligned with the objectives of the purchase, with its stake representing operating costs within the RDBPT, develop strategic under 20% of the project. income generated from the relationships with these bodies invested funds. with the aim of a 5:1 leverage on The Trust is funding the BPCT with a grant Trust capital where possible. that falls under the 5:1 leverage threshold, and the same will apply to OBPT.
Page 6 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 210
Indicator 4 The Trust has determined In conjunction with Indicator 2, The Trust has determined a number of three key pillars on which and the pillars, establish a list of projects based on the three pillars. its projects will be based; the projects which will be the Access, Knowledge and key focus of the RDBPT in the Access – a walking strategy is under Partnerships. short to medium term, and the development and has identified several assistance that the RDBPT will achievable projects for the short to Identify the key projects provide in respect to these medium term including securing long term supporting these pillars projects. access on a walking track in Akaroa, that the Trust wishes to be working to secure long term access on involved in on Banks part of the proposed Lyttelton Head to Peninsula over the next 3 Head walkway across a block currently years. seeking a subdivision consent, and undertaking work to improve the mapping and public information available on Peninsula walks.
Knowledge – funds have been allocated to assist with the publication of a definitive book on the Plant Life of Banks Peninsula by eminent botanist Hugh Wilson.
Partnerships - as described above are in progress with two key interest groups, and with the DoC Nature Heritage Fund. The Trust is also working on developing a relationship with the DoC regional and local area staff.
Develop a distributions policy in A distributions policy has been developed respect to the distributions to be and adopted. made to any projects identified.
Indicator 5 Provide tangible support for Development of a The walking strategy development is in the key projects and walkway strategy. progress. It aims to document the history of leadership building the walking on the Peninsula, the current state Access pillar Enabling access to of walking, the objectives for developing support this strategy. further walking and how these objectives can be achieved and to identify “low hanging fruit” projects on which work can commence. The strategy will be discussed at the Trust’s Strategic planning workshop in February 2013.
Indicator 6 Provide tangible support and Explore and define how to do Partnerships with BPCT and OBPT are leadership for projects building this. both in part aimed at knowledge sharing. the Knowledge pillar. The BPCT has a leadership role in sharing bio-diversity knowledge. The OBPT MOU is in part to support their desire to establish a sustainability centre aimed at public education on sustainable living.
Identify other funders who can An approach has been made to a potential support projects. private funder and a joint meeting is proposed for the new year.
Page 7 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 211
Indicator 7 Provide tangible Identify some key projects that Funding support is being given to both support for partners others have initiated that align BPCT and OBPT to assist with their with the RDBPT objectives and ongoing operations to facilitate all their explore how the RDBPT can projects, and in the case of OBPT also to support these with either funding specifically assist with the Sustainability or knowledge and broker and centre proposal. Both of these leverage its SOI objectives. organisations are directly helping to achieve the Trust’s objectives. The other key project is with NHF to support walking, other recreation and biodiversity through a property purchase.
Ensure that the partnership An MOU has been signed with BPCT. arrangements entered into with MOU’s are at the draft stage with OBPT other groups are formalised with and NHF. a Memorandum of Understanding
Page 8 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 212
Financial Performance Targets
Dec 2012 Dec 2012 Dec 2012 2013 Target Actual Variance FY Target $ $ $ $
Annual Operational Expenditure Budget Revenue 74,533 80,943 6,410 149,066 Operating Expenses (21,665) (21,368) 297 (43,329)
Operating Surplus/(Deficit) 52,869 59,575 6,707 105,737
Forecast Cashflow Opening Balance 3,702,193 3,702,194 1 3,702,193 Interest Income 74,533 80,943 6,410 149,066 Operating Expenditure (21,665) (18,086) 3,579 (43,329) Annual Minor Projects (30,000) (11,978) 18,022 (60,000) Project Expenditure (75,000) (115,000) (40,000) (150,000) Total Expenditure (126,665) (145,064) (18,400) (253,329)
Closing Balance 3,650,062 3,638,073 (11,989) 3,597,930
Forecast Capital Structure
Equity 3,650,062 3,636,518 (13,543) 3,597,930 Debt - - - -
Note: The RDBPT does not set targets for the six months to December. The December targets represent 50% of the 2013 targeted as stated in the SOI. The targets set in relation to project expenditure are based on the investment policy which has set a long term targets these have been annualised for the purposes of the SOI.
Variances Operating revenue (made up of interest received) was higher than due to higher than forecast interest rates which has resulted in a better than expected operational surplus.
The six months to 31 December 2012 saw the RDBPT make its first grants totalling $122,250 to local community projects. The trust has set a long term goal of investing 40% ($1,461,900) of its capital in projects that will leave an enduring legacy by June 2017. The spread of this investment will not be even and grants will only be made when opportunities matching the Trust’s objectives arise. For performance reporting purposes it has been necessary to provide annual targets and although the grants made exceed the target for December they are in line with the long term strategy.
The life to date grants provided by the RDBPT are $122,250.
Page 9 ATTACHMENT 6 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 213
Rod Donald Banks Peninsula Trust
Notes to the interim financial statements
Statement of Compliance
The interim financial statements for the six months ended 31 December 2012 have been prepared in accordance with NZ IAS 34 Interim Financial Reporting and New Zealand generally accepted accounting practice.
The RDBPT is a qualifying entity within the Framework for Differential Reporting. The differential reporting option is available to the RDBPT as it is not large within the meaning of this term as set out in the Framework and is not publicly accountable. The RDBPT has taken advantage of all differential reporting concessions available to it.
The interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the RDBPT’s annual financial statements as at 30 June 2012.
Accounting policies
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the RDBPT’s annual financial statements for the year ended 30 June 2012.
Contingencies
The RDBPT has no contingent assets or liabilities as at 31 December 2012
Events subsequent to balance date
There were no significant events subsequent to balance date requiring disclosure up to the date of authorisation of these financial statements.
Page 10 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 214 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 215 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 216 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 217 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 218 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 219 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 220 ATTACHMENT 7 TO CLAUSE 9 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 221 222 223
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
10. DRAFT STATEMENTS OF INTENT FOR CIVIC BUILDING LIMITED, TUAM LIMITED, WORLD BUSKERS’ FESTIVAL TRUST, ROD DONALD BANKS PENINSULA TRUST AND RICCARTON BUSH TRUST
General Manager responsible: General Manager Corporate Services, DDI 941-8528 Officer responsible: Corporate Finance Manager Author: Patricia Christie – External Reporting and Governance Manager
PURPOSE OF REPORT
1. This report presents the draft Statements of Intent (SOIs) of the Council Controlled Organisations (CCOs) for the year ended 30 June 2014, for review and comment.
2. The SOIs from the following organisations are attached for information.
Civic Building Limited (Attachment 1) Tuam Limited (Attachment 2) World Buskers’ Festival Trust (Attachment 3) Rod Donald Banks Peninsula Trust (Attachment 4) Riccarton Bush Trust (Attachment 5)
3. Also attached are comparisons between 2012/13 and 2013/14 SOIs for:
Civic Building Limited (Attachment 6) Tuam Limited (Attachment 7) World Buskers’ Festival Trust (Attachment 8) Rod Donald Banks Peninsula Trust (Attachment 9) Riccarton Bush Trust (Attachment 10)
4. The CCOs are required by statute to submit an annual SOI to Council. A SOI must set out the entity’s objectives and performance measures, as well as certain other information.
5. CCOs are required by the Local Government Act 2002 to deliver to their shareholders a draft SOI on or before 1 March. The CCOs must then consider comments on their draft SOI from their shareholders received by 1 May, and then issue a final SOI by 30 June.
6. Other than Tuam Limited there are no major surprises or changes in direction signalled in the attached documents.
7. Tuam Limited is currently negotiating the sale of its properties to the CCDU and has drafted its SOI on the basis that properties have been sold. This has necessitated a change in the company’s objectives from owning and managing the former Council Civic buildings and adjacent Tuam Street car park on a commercial and co-ordinated basis consistent with the Council’s strategies and plans, to investing in other commercial property that is consistent with the Council’s strategies and plans. As the sale negotiations have not yet concluded no financial performance targets have been included. Tuam does state that it intends repaying its $4.75 million loan from Council from the proceeds of the sale.
8. Riccarton Bush Trust and World Buskers’ Festival Trust receive grants from the Council. As the Christchurch City Three Year Plan is currently in its consultation period the final grant amounts are subject to change. It is noted that these organisations will amend their SOIs if necessary to reflect the final grant amounts once the Christchurch City Three Year Plan is approved.
9. Specific comments on each organisation are provided in the respective Attachments above.
FINANCIAL IMPLICATIONS
10. Not applicable.
224
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
10 Cont’d
Do the Recommendations of this Report Align with 2009-19 LTCCP budgets?
11. Yes
LEGAL CONSIDERATIONS
12. Not applicable.
Have you considered the legal implications of the issue under consideration?
13. Yes
ALIGNMENT WITH LTCCP AND ACTIVITY MANAGEMENT PLANS
14. Not applicable
Do the recommendations of this report support a level of service or project in the 2009-19 LTCCP?
15. Not applicable
ALIGNMENT WITH STRATEGIES
16. Not applicable
Do the recommendations align with the Council’s strategies?
17. Yes
CONSULTATION FULFILMENT
18. Not applicable
STAFF RECOMMENDATION
That the Committee recommend to the Council that it:
(a) Review the draft Statements of Intent for:
(i) Civic Building Limited
(ii) Tuam Limited
(iii) World Buskers' Festival Trust
(iv) Rod Donald Banks Peninsula Trust
(v) Riccarton Bush Trust.
(b) Advise officers of any other comments it wishes to make on the draft Statements of Intent. ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 225
CIVIC BUILDING LIMITED
STATEMENT OF INTENT
FOR THE YEAR ENDED 30 JUNE 2014
1
ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 226 ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 227
CIVIC BUILDING LIMITED STATEMENT OF INTENT FOR YEAR ENDED 30 JUNE 2014
TABLE OF CONTENTS
1.0 Introduction...... 2 2.0 Directory ...... 3 3.0 Vision ...... 4 3.0 Vision ...... 4 4.0 Nature and Scope of Activities...... 4 5.0 Governance ...... 4 6.0 Performance Targets ...... 5 7.0 Accounting Policies ...... 7 8.0 Distributions...... 7 9.0 Information to be reported to the Shareholder ...... 7 10.0 Acquisition / Divestment Policy...... 7 11.0 Compensation Sought from Local Authority ...... 7 12.0 Estimate of Commercial Value...... 7 13.0 Role in the CCC Group and Regional Economy...... 7 Appendix 1.0 Statement of Significant Accounting Policies...... 8
1
ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 228
1.0 INTRODUCTION
This Statement of Intent (SOI) is prepared in The group structure is: accordance with Section 64(1) of the Local Government Act 2002.
The SOI specifies for Civic Building Ltd (CBL) and the Civic Building Unincorporated Joint Venture (CCB JV), the objectives, the nature and scope of the activities to be undertaken, and the performance targets and other measures by which the performance of the group may be judged in relation to its objectives, amongst other requirements. It covers the three financial years ending 30 June 2014, 2015 and 2016.
The process of negotiation and determination of an acceptable SOI is a public and legally required The SOI is reviewed annually with Christchurch City expression of the accountability relationship Council and covers a three-year period. CBL is a between the group and its Shareholder, the Council Controlled Trading Organisation (CCTO) for Christchurch City Council. the purposes of the Local Government Act 2002.
CBL is 100% owned by the Christchurch City Council. Christchurch City Council provides management services to CBL through a management arrangement.
The Civic Offices project is carried out by an unincorporated joint venture jointly owned by CBL and Ngai Tahu Property Ltd and each party owns 50% of the unincorporated joint venture.
ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 229
2.0 DIRECTORY
Address: Civic Building Limited PO Box 73015 Christchurch 8154
Registered Office: 53 Hereford Street Christchurch 8011
Chairperson: Bob Parker Christchurch City Council PO Box 237 Christchurch
Board: Bob Parker Ngaire Button Jamie Gough
Company Secretary: Diane Brandish Christchurch City Council PO Box 73015 Christchurch 8154 Telephone + 64 3 941 8454
ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 230
3.0 VISION 5.0 GOVERNANCE
The CBL objectives are: The Board is responsible for the strategic direction and control of CBL’s activities. The Board guides To continue to own 50% of the Civic Building in and monitors the business and affairs of CBL on partnership with Ngai Tahu Property Ltd and behalf of the Shareholder, to whom it is lease the building to the Christchurch City accountable. Council. The joint venture is governed by a management committee comprised of representatives of CBL and Ngai Tahu. The management committee 4.0 NATURE AND SCOPE OF ACTIVITIES meets regularly and is responsible for the achievement of the goals of the joint venture. CBL and the unincorporated joint venture with Ngai Tahu Property Ltd are Council Controlled Trading Organisations (CCTO’s) for the purposes of the Local The primary function of the Board is to ensure that Government Act 2002 and the Companies Act 1993. CBL meets its objectives and requirements as listed in the SOI. Additionally, the Board has obligations The Civic Office is jointly owned by CBL and Ngai under the Local Government Act 2002 to deliver an Tahu Property Ltd, through an unincorporated joint annual Statement of Intent and relevant half-yearly venture with each party owning 50%. CBL borrowed and annual reports to the Shareholder. sufficient finance from the Council to enable it to carry out its obligations as joint venture partner with Appointments to the Board are confirmed by Ngai Tahu Property Ltd and to implement the Council resolution. proposal adopted by the Council for the design, construction and ownership of the Civic Building.
ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 231
CIVIC BUILDING LIMITED STATEMENT OF INTENT FOR YEAR ENDED 30 JUNE 2014
6.0 PERFORMANCE TARGETS
Financial Performance Targets Ratio of Shareholder Funds to Total Assets
The CBL board have agreed to repay some of the The forecast ratio of shareholder funds to total assets principal of its loan from Council as excess cash for the next three years is: allows. For the benefit of readers the financial performance targets below are shown both with and WITH LOAN PRINCIPAL REPAYMENTS without the impact of the repayment. 2013/14 2014/15 2015/16 ‐11.6% ‐13.2% ‐14.8% WITH LOAN PRINCIPAL REPAYMENTS 2013/14 2014/15 2015/16 WITH NO LOAN PRINCIPAL REPAYMENTS $000 $000 $000 2013/14 2014/15 2015/16 Revenue ‐11.5% ‐13.1% ‐14.8% Interest ‐ Finance Lease 3,688 3,656 3,621 Interest ‐ Other 138 101 65 Capital Structure Other income 1,296 1,321 1,346 5,122 5,078 5,032 The forecast capital structure for the next three Expenses years is: Finance costs 5,312 5,202 5,165 Other expenses 977 1,003 1,031 WITH LOAN PRINCIPAL REPAYMENTS 6,289 6,205 6,196 2013/14 2014/15 2015/16 $000 $000 $000 Profit/ (loss) before income tax (1,167) (1,127) (1,164) Uncalled Capital 10,000 10,000 10,000 RPS Shares 6,188 6,188 6,188 Income tax expenses / (income) (327) (367) (379) Borrowings from Council 57,688 56,488 56,088 Finance Lease asset 51,694 51,215 50,701 Profit / (loss) for period (840) (760) (785) Total Assets 60,269 58,646 57,732
WITH NO LOAN PRINCIPAL REPAYMENTS 2013/14 2014/15 2015/16 WITH NO LOAN PRINCIPAL REPAYMENTS $000 $000 $000 2013/14 2014/15 2015/16 $000 $000 $000 Revenue Uncalled Capital 10,000 10,000 10,000 Interest ‐ Finance Lease 3,688 3,656 3,621 RPS Shares 6,188 6,188 6,188 Interest ‐ Other 184 149 147 Borrowings from Council 59,288 59,288 59,288 Other income 1,296 1,321 1,346 Finance Lease asset 51,694 51,215 50,701 5,168 5,126 5,114 Total Assets 61,745 61,170 60,508 Expenses Finance costs 5,459 5,459 5,459 Other expenses 977 1,003 1,031 6,436 6,462 6,490
Profit/ (loss) before income tax (1,268) (1,336) (1,376)
Income tax expenses / (income) (365) (426) (436)
Profit / (loss) for period (903) (910) (940)
CBL is forecasting cash deficits for the period covered by this SOI. Long term projections (incorporating rent reviews) are for CBL to generate positive cash flows and there is adequate funding in place to support it until this time.
CBL is planning to repay some of its borrowing from Council as excess cash allows during the period of the SOI.
5 ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 232
Operational Performance Targets
In addition to the above financial performance measures, the Group will use the following measures to assess its performance in the 2014 financial year:
Objective and Strategy Performance Measure
Meet the financial targets contained within this SOI Budgeted key performance indicators are met or exceeded
Manage the investment in a commercially astute and Ensure the Civic building is managed in accordance with the prudent manner. management agreement.
Environmental and Social Performance Targets
In addition to the above financial performance measures, CBL will use the following measures to assess its performance in the 2014 financial year:
Performance Target Performance Measure
The Civic Building was designed to achieve a high Ensure the Civic Building operates in a manner that preserves standard in terms of environmental and energy 6 Green Star accreditation features. sustainability.
Christchurch City Council Sustainable Energy Strategy
The Christchurch City Council Sustainable Energy Strategy is an important initiative that CBL supports. Everyone needs to play their part as the worldwide escalation of energy usage is leading to unprecedented problems including global warming, unsustainable use of fuels, future fuel shortages, health and social issues and fuel poverty.
Under the Strategy the Civic Offices were designed to be an “exemplary standard in terms of sustainable design and energy performance.”
The building was designed for ultra low energy consumption, maximum use of renewable energy sources and with an extremely low carbon footprint.
Benefits from this are:
Council and city are shown as leaders Provides benchmark for Council to encourage others to follow suit Low energy bills Involves a further layer of skills from the community and the building industry Will be a further step on the eco-tourism trail through the City
CBL will continue to incorporate these goals in its operations. ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 233
CIVIC BUILDING LIMITED STATEMENT OF INTENT FOR YEAR ENDED 30 JUNE 2014
7.0 ACCOUNTING POLICIES 10.0 ACQUISITION / DIVESTMENT POLICY
CBL has adopted accounting policies that are The subscription or acquisition of securities in any consistent with New Zealand International Financial company or organisation, or a divestment of part of Reporting Standards, generally accepted the existing business, will only be considered where it accounting practice and the policies adopted by is consistent with the long-term commercial the Christchurch City Council group. Current objectives of CBL. accounting policies are attached to this Statement of Intent When the subscription, acquisition or divestment is considered by Directors to be significant to CBL’s business operations, it will be subject to consultation 8.0 DISTRIBUTIONS with the Shareholders.
During the year to 30 June 2013 CBL will make no Major transactions as defined in the Companies Act distribution to the Shareholder. 1993, s129(2), will be subject to Shareholders’ approval by special resolution.
9.0 INFORMATION TO BE REPORTED TO Where CBL decides to incorporate or subscribe for shares in subsidiaries to undertake its commercial THE SHAREHOLDER activities, it will ensure effective management of that subsidiary. Control of any subsidiary is exercised by An annual report will be submitted to the CBL’s Directors and staff. Shareholders. The annual report will include audited financial statements and such other details as are necessary to permit an informed assessment of the 11.0 COMPENSATION SOUGHT company’s performance and financial position during the reporting period provided to the FROM LOCAL AUTHORITY Shareholders. At the request of the Shareholder, CBL may Half-yearly reports will also be provided to the undertake activities that are not consistent with Shareholders. These reports will contain unaudited normal commercial objectives. Specific financial information and comply with NZ IAS 34. arrangements will be entered into to meet the full commercial cost of providing such activities. The statement of intent will be submitted to the Shareholders for consultation annually, as required Currently, no such activities are undertaken. by the Local Government Act 2002. The Directors will include any other information they consider appropriate. Where it is appropriate, revised 12.0 ESTIMATE OF COMMERCIAL VALUE forecasts will be submitted to the Shareholders. The Shareholder has recorded the value of its CBL will operate on a ‘no surprises’ basis in respect of investment in Civic Building Ltd in its accounts and significant Shareholder related matters, to the extent this is considered an appropriate estimation of the possible in the context of commercial sensitivity and commercial value of the company. confidentiality obligations.
CBL will provide information requested by the 13.0 ROLE IN THE CCC GROUP AND Shareholders in accordance with the requirements of REGIONAL ECONOMY the Local Government Act 2002.
Commercial Relationships within the CCC Group
CBL has a mandate from the Shareholder, the Christchurch City Council, to own the Civic Building and lease it to the Council. CBL will utilise the services of the Council to manage its affairs.
7 ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 234
APPENDIX 1.0 The functional and presentation currency is New Zealand dollars, and all values are rounded to the
nearest thousand dollars ($000). STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES In preparing its financial statements CBL is required to make judgements, estimates and assumptions Reporting Entity that affect the application of policies and reported amounts of assets and liabilities, income These are the significant accounting policies of and expenses. The estimates and associated Civic Building Limited (CBL). assumptions are based on historical experience and other factors that are believed to be CBL is registered under the Companies Act 1993 reasonable under the circumstances. These and is domiciled in New Zealand. CBL is a Council estimates and assumptions form the basis for Controlled Trading Organisation as defined by making judgements about the carrying values of Section 6 of the Local Government Act 2002. assets and liabilities, where these are not readily apparent from other sources. Actual results may differ from these estimates. Until 25th June 2008 Tuam 2 Ltd was 50% owned by
CBL and 50% owned by Ngai Tahu Property Ltd. Estimates and underlying assumptions are regularly Tuam 2 Ltd was the company tasked with the reviewed. Any change to estimates is recognised design, construction and ownership of the Civic in the year if the change affects only that year, or Offices on Worcester St, pursuant to the proposal into future years if it also affects future years. In the approved by the Christchurch City Council on process of applying CBL’s accounting policies, Thursday 11 October 2007. On 25th June 2008, the management has made the following judgements Council approved a change in the structure for estimates and assumptions that have had the most the Civic Offices project and this resulted in Tuam 2 significant impact on the amounts recognised in Ltd being 100% owned by Civic Building Ltd. The these financial statements. The determination of Civic Offices project was carried out by an the fair value of investment property is regarded as unincorporated joint venture, 50% owned by Civic a critical estimate and is valued at least on an Building Ltd and 50% by Ngai Tahu Property Ltd. annual basis. This requires the estimation of current Accordingly, Civic Building Ltd has designated market values by an independent registered itself as a profit orientated entity for the purposes valuer. of New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS). CBL has adopted the following revisions to accounting standards for the 2014 financial year On 30 June 2009, CBL and Tuam 2 Ltd which have only had a presentational or disclosure amalgamated, with the assets and liabilities of effect: Tuam 2 Ltd brought into CBL. Tuam 2 Ltd no longer exists and CBL directly owns 50% of the NZ IFRS 12 Disclosure of interests in other entities unincorporated joint venture with Ngai Tahu effective for accounting periods beginning on or Property Ltd. after 1 January 2013 – NZ IFRS 12 contains the disclosure requirements for entities that have Basis of financial statement preparation interests in subsidiaries, joint arrangements (i.e. joint operations or joint ventures), associates and/or The financial statements are prepared in unconsolidated structured entities, aiming to accordance with NZ GAAP, complying with NZ IFRS provide information to enable users to evaluate: and other applicable Financial Reporting the nature of, and risks associated with, an Standards. entity’s interests in other entities; and the effects of those interests on the entity’s The financial statements are prepared on a financial position, financial performance and historical cost basis, except for the revaluation of cash flows. investment properties.
ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 235
NZ IFRS 13 Fair Value Measurement effective for Insurance proceeds accounting periods beginning on or after 1 Insurance proceeds are recognized in the January 2013 – NZ IFRS 13 replaces the fair value statement of comprehensive income when measurement guidance contained in individual compensation becomes receivable. IFRSs with a single source of fair value measurement guidance. It defines fair value, Financing costs establishes a framework for measuring fair value Financing costs comprise interest payable on and sets out disclosure requirements for fair value borrowings calculated using the effective interest measurements. It explains how to measure fair rate method. All interest payable on borrowing is value when it is required or permitted by other recognised as an expense in the statement of IFRSs. It does not introduce new requirements to comprehensive income as it occurs. measure assets or liabilities at fair value, nor does it eliminate the practicability exceptions to fair value Income tax measurements that currently exist in certain Income tax on the profit or loss for the year standards. comprises current and deferred tax. Income tax is recognised in the income statement except to the CBL will adopt the following revision to accounting extent that it relates to items recognised directly in standards for subsequent financial years, it does equity, in which case it is recognised in equity. not intend to early adopt the standard: Current tax is the expected tax payable on the NZ IFRS 9 Financial Instruments – replacing NZ IAS 39 taxable income for the year, using tax rates Financial Instruments: Recognition and enacted or substantially enacted at the balance Measurement – effective for accounting period sheet date, and any adjustment to tax payable in beginning on or after 1 January 2015. NZ IFRS 9 respect of previous years. uses a single approach to determine whether a financial asset is measured at amortised cost or fair Deferred tax is provided using the balance sheet value. Entities are required to classify financial liability method, providing for temporary assets based on the objectives of the entity’s differences between the carrying amounts of business model for managing the financial assets. assets and liabilities for financial reporting purposes Where the financial assets are eligible to be and the amounts used for taxation purposes. measured at amortised cost due to the business model, the entity shall use the characteristics of The amount of deferred tax provided is based on the contractual cash flows to measure cost. the expected manner of realisation or settlement of the carrying amount of assets and liabilities, Revenue using tax rates enacted or substantively enacted at the balance sheet date. Interest income Interest income is recognised in the statement of A deferred tax asset is recognised only to the comprehensive income as it accrues using the extent that it is probable that future taxable profits effective interest method. will be available against which the asset can be utilised. Deferred tax assets are reduced to the Finance lease income extent that it is no longer probable that the related Finance lease income is allocated over the lease tax benefit will be realised. term on a systematic and rational basis. This income allocation is based on a pattern reflecting Cash and cash equivalents a constant periodic return on CBL’s net investment Cash and cash equivalents comprise cash in the finance lease. balances and call deposits, and other short-term highly liquid investments with maturities of three Operating lease income months or less. Bank overdrafts that are repayable Operating lease income is recognized in the on demand and form an integral part of the CBL’s statement of comprehensive income on a straight- cash management are included as a component line basis over the term of the lease. of cash and cash equivalents for the purpose of the statement of cash flows, and in current liabilities on the statement of financial position.
ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 236
CIVIC BUILDING LIMITED STATEMENT OF INTENT FOR YEAR ENDED 30 JUNE 2014
Financial assets each balance sheet date to determine whether Term deposits with maturities greater than three there is any indication of impairment. If any such months are measured at cost and have been indication exists, the asset’s recoverable amount is designated as loans and receivables. estimated.
Trade and other receivables An impairment loss is recognised whenever the Trade and other receivables are initially measured carrying amount of an asset exceeds its at fair value and subsequently measured at recoverable amount. Impairment losses are amortised cost less impairment provision. recognised in the profit or loss.
Leases Trade and other payables
Finance leases Creditors and other payables are initially measured Leases in which substantially all of the risks and at fair value and subsequently measured at rewards of ownership of an asset transfer to the amortised cost. lessee are classified as finance leases whether or not title is eventually transferred. At inception, Interest-bearing borrowings finance leases are recognised in the statement of Interest-bearing borrowings are recognised initially financial position at the present value of the at fair value less attributable transaction costs. minimum lease payments plus the present value of Subsequent to initial recognition, interest-bearing any unguaranteed residual value expected to borrowings are stated at amortised cost using the accrue at the end of the lease term. effective interest method.
Amounts due from lessees under finance leases are Provisions recorded as receivables. Finance lease payments A provision is recognised in the statement of are allocated between interest revenue and financial position when CBL has a present legal or reduction of the lease receivable over the term of constructive obligation as a result of a past event, the lease in order to reflect a constant rate of and it is probable that an outflow of expenditures, return on the net investment outstanding in respect the amount of which can be reliably estimated, will of the lease. be required to settle the obligation. If the effect is material, provisions are determined by discounting Operating leases the expected future cash flows at a pre-tax rate An operating lease is a lease that does not transfer that reflects current market assessments of the time substantially all the risks and rewards incidental to value of money and, where appropriate, the risks ownership of an asset. specific to the liability.
Investment property Share capital The land and buildings to be leased to third parties under operating leases are classed as investment Ordinary share capital property. Ordinary shares are classified as equity.
Investment property is measured initially at its cost, Incremental costs directly attributable to the issue including transaction costs. of new shares are shown in equity as a deduction, net of tax, from the proceeds. After initial recognition, the investment property is measured at fair value as determined annually by Preference share capital an independent valuer. Preference share capital is classified as equity if it is non-redeemable and any dividends are Gains or losses arising from a change in the fair discretionary, or is redeemable but only at the value of investment property are recognised in the company’s option. Dividends on preference share profit or loss. capital classified as equity are recognised as distributions within equity. Impairment The carrying amounts of the Company’s assets, other than deferred tax assets, are reviewed at
10 ATTACHMENT 1 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 237
Goods and Services Tax The financial statements are prepared exclusive of GST with the exception of receivables and payables that are shown inclusive of GST. Where GST is not recoverable as an input tax it is recognised as part of the related asset or expense.
The net amount of GST recoverable from, or payable to, the Inland Revenue Department is included as part of receivables or payables in the statement of financial position.
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 238
TUAM LIMITED
Statement of Intent For the year ended 30 June 2014
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 239
Contents
Contents ...... 1
1. Introduction ...... 2
2. Directory ...... 2
3. Objectives ...... 3
4. Nature and Scope of Activities ...... 3
5. Governance ...... 3
6. Performance Targets...... 4
7. Accounting Policies...... 5
8. Distributions ...... 5
9. Information to be provided to the Shareholder...... 5
10. Acquisition/Divestment Policy ...... 6
11. Compensation Sought from Local Authority ...... 6
12. Estimate of Commercial Value ...... 6
13. Role in the Council Group and Regional Economy ...... 7
Appendix 1 - Summary of Significant Accounting Policies...... 8
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 240
1. Introduction
This Statement of Intent (SOI) is prepared in accordance with Section 64(1) of the Local Government Act 2002.
The SOI specifies for Tuam Ltd (Tuam), the objectives, the nature and scope of the activities to be undertaken, and the performance targets and other measures by which the performance of Tuam may be judged in relation to its objectives, amongst other requirements. It covers the three financial years ending 30 June 2014, 2015 and 2016.
The process of negotiation and determination of an acceptable SOI is a public and legally required expression of the accountability relationship between Tuam and its Shareholder, the Christchurch City Council (Council).
Tuam’s directors are Council Chief Executive Tony Marryatt and Council General Manager Corporate Services Paul Anderson.
The SOI is reviewed annually and covers a three-year period. Tuam is a Council Controlled Trading Organisation (CCTO) for the purposes of the Local Government Act 2002.
2. Directory
Address: Tuam Limited PO Box 73015 Christchurch
Registered Office: 53 Hereford St Christchurch
Chairperson: Tony Marryatt C/- Tuam Ltd PO Box 73015 Christchurch
Board: Tony Marryatt Paul Anderson
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 241
3. Objectives
The primary objective of Tuam was to own the former council civic buildings and adjacent Tuam St car park and manage them on a commercial and co-ordinated basis consistent with the Council’s strategies and plans.
With the rebuild of Christchurch the properties have been identified by the Central City Development Unit (CCDU) as the location of the bus exchange and part of the southern frame. As a result, the properties will be sold to the CCDU during the 2012/13 financial year and Tuam will invest the proceeds consistent with the Council’s strategies and plans.
4. Nature and Scope of Activities
Tuam is a Council Controlled Trading Organisation (CCTO) for the purposes of the Local Government Act 2002 and the Companies Act 1993.
Tuam is the company to which the Council entrusted ownership and management of the former Council civic offices and adjacent car park. With the sale of its properties to the CCDU Tuam will then invest the proceeds while investigating other commercial property investments which are consistent with the Council’s strategies and plans.
Tuam is regarded as a ‘for profit’ CCTO.
5. Governance
The Board is responsible for the proper direction and control of Tuam’s activities. The Board guides and monitors the business and affairs of the company on behalf of the Shareholder, to whom it is accountable.
All Directors are required to comply with the New Zealand Institute of Directors’ Code of Proper Practice for Directors.
The primary function of the Board is to ensure that Tuam meets its objectives and requirements as listed in the SOI. Additionally, the Board has obligations under the Local Government Act 2002 to deliver an annual Statement of Intent and relevant half- yearly and annual reports to the Shareholder.
Appointments to the Board are confirmed by Council resolution.
The Chief Executive of CCC has responsibility for the leadership and management of the company. The Chief Executive is assisted by the CCC General Manager Corporate Services and the company may make use of external advisors from time to time.
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 242
6. Performance Targets
Financial Performance Targets
As the Company is still in the process of negotiating the sale price for its investment property with the CCDU and settling the insurance claims on its buildings at this time it cannot accurately determine the financial implications from this transaction.
It is the Company’s intention to repay the debt owing to its shareholder of $4.75 million on the receipt of the sale proceeds.
The remaining surplus funds will be invested in cash deposits while the Company investigates other commercial property investments.
Operational Performance Targets
In addition to the above financial performance measures, Tuam will use the following measures to assess its performance of the financial year:
Performance Target Performance Measure Tuam will repay its loan to Council Tuam will repay its outstanding debt to Council on receipt of the proceeds from the sale of its properties. The company meets all relevant legislative No breaches of legislative or contractual and contractual requirements. requirements are recorded
The main activity of the company in the coming year will be to seek appropriate investment opportunities.
Council’s Sustainable Energy Strategy
The Council’s Sustainable Energy Strategy is an important initiative that Tuam supports. Everyone needs to play their part as the worldwide escalation of energy usage is leading to unprecedented problems including global warming, unsustainable use of fuels, future fuel shortages, health and social issues and fuel poverty.
Central City Blueprint
Tuam recognises the broad objectives proposed by the CCDU in the Central City Blueprint. These are of relevance to the company, as its property is being acquired by the CCDU for the bus exchange and to form a portion of the southern frame. The Company will work with the Council to identify appropriate commercial investment opportunities within the Central City Blueprint.
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 243
7. Accounting Policies
Tuam has adopted accounting policies that are consistent with New Zealand International Financial Reporting Standards, generally accepted accounting practice and the policies adopted by the Christchurch City Council group. The company’s current accounting policies are attached to this Statement of Intent
8. Distributions
During the year to 30 June 2014 the company may make a distribution to is Shareholder depending on investment opportunities.
9. Information to be provided to the Shareholder
An annual report will be submitted to the Shareholders. The annual report will include audited financial statements and such other details as are necessary to permit an informed assessment of the company's performance and financial position during the reporting period provided to the Shareholders.
Half-yearly reports will also be provided to the Shareholders. These reports will contain unaudited information and comply with NZ IAS 34.
Annual reports will be produced consistent with the “triple bottom line” (or sustainability) reporting philosophy. The reports will outline the company’s objectives and performance in terms of:
Financial Environmental and Social inputs, outputs and outcomes
The statement of intent will be submitted to the Shareholders for consultation annually, as required by the Local Government Act 2002. The Directors will include any other information they consider appropriate. Where it is appropriate, revised forecasts will be submitted to the Shareholders.
The company will operate on a “no surprises” basis in respect of significant Shareholder- related matters, to the extent possible in the context of commercial sensitivity and confidentiality obligations.
The company will provide information requested by the Shareholders in accordance with the requirements of the Local Government Act 2002.
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 244
10. Acquisition/Divestment Policy
The subscription or acquisition of securities in any company or organisation, or a divestment of part of the existing business, will only be considered where it is consistent with the long-term commercial objectives of Tuam.
When the subscription, acquisition or divestment is considered by Directors to be significant to the company's business operations, it will be subject to consultation with the Shareholders. Major transactions as defined in the Companies Act 1993, s129(2), will be subject to Shareholders' approval by special resolution.
Where the company decides to incorporate or subscribe for shares in subsidiaries to undertake its commercial activities, the company will ensure effective management of that subsidiary. Control of any subsidiary is exercised by Tuam’s Directors and staff.
11. Compensation Sought from Local Authority
At the request of the Shareholder, the company may undertake activities that are not consistent with normal commercial objectives. Specific financial arrangements will be entered into to meet the full commercial cost of providing such activities.
Currently, no such activities are undertaken.
12. Estimate of Commercial Value
The Shareholder has recorded the value of its investment in Tuam in its accounts as $5.417 million and this is considered an appropriate estimation of the commercial value of the company.
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 245
13. Role in the Council Group and Regional Economy
Commercial Relationships within the Council Group
It is expected that for 2014 Tuam’s only commercial relationship with the Council group will be the financial and administration services that it receives from Council staff.
Role in the Growth of the Regional Economy
Tuam will contribute to regional economic prosperity by investing in and managing commercial property in an astute manner.
Paul Anderson Anthony Marryatt Director Director
Date Date
Page 7 ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 246
Appendix 1 – Summary of Significant Accounting Policies
This summary is set out in a form consistent with the form in which the accounting policies will be set out when presented with Tuam’s financial statements. No financial statements are included with this SOI. a. Statement of Compliance
The financial statements of Tuam Limited (the ‘Company’) have been prepared in accordance with New Zealand generally accepted accounting practice. They comply with the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS). b. Basis of financial statement preparation
The financial statements are prepared under the historical cost convention, as modified by the revaluation of investment properties.
The functional and presentation currency is New Zealand dollars, and all values are rounded to the nearest thousand dollars ($,000)
In preparing these financial statements Tuam Ltd has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances. There are no estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Standards, amendments and interpretations issued but not yet effective that have not yet been early adopted, and which are relevant to Tuam Ltd include:
NZ IAS 24 Related Party Disclosures (Revised 2009) effective 1 January 2011 - This Standard makes amendments to New Zealand Accounting Standard NZ IAS 24 Related Party Disclosures. The amendments simplify the definition of a related party and provide a partial exemption from the disclosure requirements for government-related entities.
NZ IFRS 9 Financial Instruments will eventually replace NZ IAS 39 Financial Instruments: Recognition and Measurement. NZ IAS 39 is being replaced through the following 3 main phases: Phase 1 Classification and Measurement, Phase 2 Impairment Methodology, and Phase 3 Hedge Accounting. Phase 1 on classification and measurement of financial assets has been completed and has been published in the new financial instrument standard NZ IFRS 9. NZ IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing many different rules in NZ IAS39.
The approach in NZ IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the many different impairment methods in NZ IAS 39. The new standard is required to be adopted for the year ending 2013. In the absence of sufficient information about the ongoing development of ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 247
this new standard the Company is not able to fully assess its impact and therefore the Company is not in a position to make a decision to early adopt the standard or not.
NZ IFRS 13 Fair Value Measurement replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance. It defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to measure fair value when it is required or permitted by other IFRSs. It does not introduce new requirements to measure assets or liabilities at fair value, nor does it eliminate the practicability exceptions to fair value measurements that currently exist in certain standards. NZ IFRS 13 is to be applied for reporting periods beginning on or after January 1 2013.
FRS-44 New Zealand Additional Disclosures and Amendments to NZ IFRS to harmonise with IFRS and Australian Accounting Standards (Harmonisation Amendments) – These were issued in May 2011 with the purpose of harmonising Australia and New Zealand’s accounting standards with source IFRS and to eliminate many of the differences between the accounting standards in each jurisdiction. The amendments must first be adopted for the year ended 30 June 2012. c. Revenue
Rental income from investment property is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income. Interest income is recognised using the effective interest method. d. Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred. e. Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 248
assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. f. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits, and other short-term highly liquid investments with maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows, and in current liabilities on the balance sheet. g. Trade and other receivables
Trade and other receivables are initially measured at fair value and subsequently measured at amortised cost less impairment provision. h. Investment Property The Tuam Street car park and associated buildings are classified as investment property. Investment property is measured initially at its cost, including transaction costs. After initial recognition, the investment property is measured at fair value as determined annually by an independent valuer. Gains or losses arising from a change in the fair value of investment property are recognised in the statement of financial performance i. Impairment
The carrying amounts of the Company’s assets, other than deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the income statement. j. Trade and other payables
Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost. k. Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.
ATTACHMENT 2 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 249
l. Equity
Share capital Ordinary shares and redeemable preference shares are classified as equity. m. Goods and Services Tax
The financial statements are prepared exclusive of GST with the exception of receivables and payables that are shown inclusive of GST. Where GST is not recoverable as an input tax it is recognised as part of the related asset or expense.
The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of receivables or payables in the statement of financial position.
The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows.
Commitments and contingencies are disclosed exclusive of GST.
Page 11 ATTACHMENT 3 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 250
STATEMENT OF INTENT FOR THE WORLD BUSKERS FESTIVAL TRUST
1. INTRODUCTION
Legal Name The World Buskers Festival Trust PO Box 73015 Postal Address Christchurch 8154 53 Hereford Street Street Address Christchurch 8011 Chair Geoffrey Cranko (interim) Trustees Geoffrey Cranko Stephen Astor
Legal Status of organisation
The World Buskers Festival Trust has been established by Christchurch City Council as a not‐for‐profit council controlled organisation under the Local Government Act 2002.
The World Buskers Festival Trust is registered under the Charities Act 2005, with effect from 8 December 2010. The World Buskers Festival Trust also has donee status with the Inland Revenue Department.
Period Covered by this Statement of Intent
This Statement of Intent for the World Buskers Festival Trust covers the three financial years ending 30 June 2013, 2014 and 2015. ATTACHMENT 3 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 251
2. OBJECTIVES AS STATED IN THE TRUST DEED
The purpose of the Trust is to achieve the following objectives to the extent that those objectives are charitable under the law of New Zealand:
(a) To devise, manage and hold an annual buskers festival in Christchurch with a view to: (i) providing a national and international profile and identity for New Zealand street theatre; (ii) providing opportunities for local buskers to reach a wider audiences; (iii) providing a street theatre festival that is accessible to the public including the provision of free events and where charges are made, the commitment to maintain low ticket prices to those performances; (iv) generating profit for the Trust to be applied according to the provisions and purposes of this Trust; (v) providing a yearly focus for those working in street theatre so that they may showcase, celebrate and discuss New Zealand street theatre.
(b) To further foster the growth of street theatre as a performing art in New Zealand, and in particular: (i) to establish an annual street theatre festival in Christchurch; (ii) to establish, promote and foster the demonstration and teaching of all forms of street theatre at educational, community or cultural institutions and organisations or on a personal or individual basis; (iii) to establish, promote and foster community programmes, workshops, public classes and other activities relating to any aspect of all forms of street theatre; (iv) to encourage and promote the training (professional or otherwise) of buskers and all others interested or involved in any aspects of street theatre; (v) to promote, foster and encourage visits to New Zealand by overseas buskers (individually or in groups), teachers and tutors of street theatre with a view to their passing on and teaching their skills in and knowledge of all forms of street theatre to those interested in that performing art and presenting performances by such visitors; (vi) to promote and seek public and private financial and other support for groups and persons active or interested in all forms of street theatre; (vii) to promote, foster, encourage, maintain, assist and fund buskers (either individually or in groups) in their presentation for the benefit of the public at performances and other functions; (viii) to encourage and provide financial reward and remuneration, ATTACHMENT 3 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 252
(ix) scholarships, grants and assistance for those making particular and significant contributions, efforts and achievements in and to all forms of street theatre or showing promise or potential in any of these fields; (x) to arrange, promote and undertake tours, performances and other activities including cultural and professional exchanges by buskers (either individually or in groups) or other persons involved in street theatre.
(c) To encourage the participation of the wider community as audiences and performers in the performing art of street theatre as a recreational activity.
(d) To increase the importance of street theatre as part of our cultural community and to show New Zealanders that street theatre should be a valued part of our culture.
(e) To make known and further the objects and activities of the Trust and to advise the manner in which its funds have been, are being or will be applied including working with representatives of the media and by advertising in any medium.
(f) To act as an instrument to generate capital and income and manage the same and to enhance Trust property for the aims and objects herein stated and for the purposes herein referred to.
(g) Such other activities and objectives relating to all forms of street theatre which are of a charitable nature and which, as the Trustees may decide, are consistent with and able to be pursued together with the other charitable purposes of the Trust.
(h) To work in conjunction with other groups, bodies and organisations having common aims and objects.
ATTACHMENT 3 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 253
3. PERFORMANCE TARGETS
Operational Performance Targets
Performance Target Performance Measure
Visitor attendance Attract at least 300,000 visits 90% of visitors are satisfied with the Customer satisfaction festival (independent research on a three year cycle) Festival business plan to include succession planning for key roles to reduce risk of non‐performance. Festival development Any surplus generated to be for future festival development (refer financial targets below)
Financial Performance Targets
Year Ended 30 June 2014 2015 2016 Revenue $1,815,000 $1,815,000 $1,815,000
Expenses $1,815,000 $1,814,000 $1,814,000
Surplus $0 $1,000 $1,000
The World Buskers' Festival Trust is a charitable trust, accumulated surpluses will be used by the Trustees to develop the festival and further the Trust's objectives.
ATTACHMENT 3 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 254
4. FINANCIAL DISCLOSURE
Accounting Policies
The World Buskers Festival Trust has adopted accounting policies that are consistent with generally accepted accounting practice in New Zealand (NZ GAAP). They comply with New Zealand International Financial Reporting Standards (NZIFRS) and other applicable Financial Reporting Standards, as appropriate for public benefit entities.
A summary of the current accounting policies is attached in Appendix 1.
Differential Reporting
The World Buskers Festival Trust is a qualifying entity within the Framework of Differential Reporting. The differential reporting option is available to the Trust as it is not large within the meaning of the term as set out in the Framework. The Trust has taken advantage of all differential reporting concessions available to it.
The financial statements are prepared on the basis of historical cost, except for the revaluation of certain non current assets.
5. GOVERNANCE STATEMENT
The World Buskers Festival Trust is governed by a Board of Trustees appointed by the Christchurch City Council (CCC). The Trust Deed enables the CCC to appoint 5 Trustees and also to appoint a Chairperson from among those Trustees.
The Trustees have elected not to receive remuneration for their role as Trustees.
The Trust does not have any committees.
6 Compensation sought from Local Authority
The World Buskers' Festival Trust seeks compensation from Council in the form of grants. The Grant income planned and forecast is:
2013/14 $230,000 2014/15 $230,000 2015/16 $230,000
7 Information to be provided to Council
An Annual Report will be submitted to the Council. The annual report will include audited financial statements, including the report of the auditor and such other details as are necessary to permit an informed assessment of the Trust's performance and financial position during the reporting period provided.
ATTACHMENT 3 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 255
Half‐yearly reports will also be provided to the Council. These reports will contain unaudited information and comply with NZ IAS 34.
Annual reports will outline the Trust's objectives and performance in terms of:
Financial Festival performance
The Statement of Intent will be submitted to the Council for consultation annually, as required by the Local Government Act 2002.
The World Buskers' Festival Trust and the Council will operate on a “no surprises” basis in respect of significant 'Council interest' related matters, to the extent possible in the context of commercial sensitivity and confidentiality obligations.
The Trust will provide information requested by the Council as settlor in accordance with the requirements of the Local Government Act 2002.
The Council will provide services in a timely and transparent manner to the Trust for the benefit of the Event.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 256
ROD DONALD BANKS PENINSULA TRUST Te Pataka o Rakaihautu
Statement of Intent
For the year ending 30 June 2014 ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 257
ROD DONALD BANKS PENINSULA TRUST STATEMENT OF INTENT (SoI) For the year ending 30 June 2014
1. Introduction
2. Objectives of the Trust
3. Nature and Scope of Activities of the Trust
4. Corporate Governance Statement
5. Accounting Policies
6. Performance Targets and Measures
7. Information to be Provided
8. Acquisition of Shares in any Company
9. Ratio of Consolidated Trust Funds to Total Assets
10. Estimate of Distributions of Accumulated Profits and Capital Reserves
11. Commercial Value of Investment
12. Activities for Which Compensation is Sought From any Local Authority
APPENDIX 1 – Map of the district administered by the former Banks Peninsula District APPENDIX 2 – Summary of significant accounting policies
APPENDIX 3 – Investment principles ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 258
1. INTRODUCTION
This Statement of Intent (“SoI”) is prepared in accordance with Section 64(1) of the Local Government Act 2002.
The SoI specifies for the Rod Donald Banks Peninsula Trust (“RDBPT”) the objectives, the nature and scope of the activities to be undertaken, and the performance targets and other measures by which the performance of the Trust may be judged in relation to its objectives, amongst other requirements.
The process of negotiation and determination of an acceptable SoI is a public and legally required expression of the accountability relationship between the RDBPT and its Settlor the Christchurch City Council, and its Trustees.
The SoI is reviewed annually by the Council and covers a three year period.
The RDBPT’s registered office is at the offices of Christchurch City Council, 53 Hereford Street, Christchurch.
The contact details for the RDBPT and its officers are:
Postal Address:P.O. Box 5, Little River, Banks Peninsula 7591 or [email protected] Physical Address: c/o Simon Mortlock, Mortlock McCormack, 99 Clarence Street, Riccarton, Christchurch
The RDBPT is a council-controlled organisation (“CCO”) for the purposes of the Local Government Act 2002.
2. OBJECTIVES OF THE TRUST
The RDBPT is a trust for charitable purposes.
The RDBPT exists for the benefit of the present and future inhabitants of Banks Peninsula and for visitors to Banks Peninsula.
The RDBPT’s activities will focus on the area within the district administered by the Banks Peninsula District Council immediately prior to its amalgamation with the Christchurch City Council (the “Region”). A map of this Region is included as Appendix One to this Statement of Intent.
The objectives of the RDBPT are:
(a) to promote sustainable management and conservation (consistent with the purposes and principles of the Resource Management Act 1991 and the Conservation Act 1987 and any replacement legislation) of the natural environment in the Region;
(b) to establish, support or facilitate environmental based projects that are focussed on: ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 259
(i) the maintenance and development of recreation facilities including parks, reserves, walkways and affordable camping grounds in the Region;
(ii) providing public access to recreation facilities including parks, reserves, walkways and affordable camping grounds in the Region;
(iii) the reinstatement and preservation of native vegetation in the Region;
(iv) the enhancement of the natural biodiversity of the Region;
(v) the restoration of the Region’s waterways to their natural state; and
(vi) the protection of native endangered species present in the Region;
(c) to establish, support or facilitate projects that are focussed on the protection, preservation and enhancement of areas of historical or cultural significance, or the built heritage of the Region;
(d) to undertake or facilitate in any other way research projects or scientific enquiries to carry out the Objects;
(e) to provide educational opportunities to further the public’s understanding or enjoyment of the natural, historical and cultural qualities of the Region;
(f) to commission or otherwise support research and monitor projects relating to the status and quality of the natural and physical environment throughout the Region;
(g) to purchase or lease land to:
(i) carry out any improvements on land for the sustainable management of the environment or more general environmental or conservational purposes of the Trust,
(ii) provide facilities or opportunities for the educational purposes of the Trust;
(h) to source and allocate funds for projects which support, promote or otherwise contribute to the Objects;
(i) to seek the support and involvement of appropriate persons, organisations and agencies, (including the Christchurch City Council) and ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 260
work alongside or collaboratively with such persons, organisations and agencies to carry out the Objects;
(j) to hold seminars, tutorials and lectures within the Region and throughout Canterbury to demonstrate research relating to the objects, and to encourage the public to become involved with or to generally promote the aims and purposes of the Trust to the community;
(k) to carry out any other charitable purpose which is capable of being carried out in connection with the Objects or may directly, or indirectly, advance the Objects;
(l) to raise money and to seek, accept and receive gifts, donations, grants, endowments, legacies and bequests of money or in kind for the Objects; and
(m) to do all such other acts and things that are incidental or conducive to the attainment of the Objects.
In pursuance of the objectives of the RDBPT, the Trustees are required to have regard to:
(a) the views of Te Hapu o Ngati Wheke (Rapaki), Te Runanga o Koukourarata, Wairewa Runanga, Te Taumutu Runanga and Onuku Runanga in respect to the value of Banks Peninsula’s Mana Whenua (Land), Mana Moana (Waterways) and Mana Tangata (People);
(b) the potential for alignment between the activities of the Trust and any existing or future projects or initiatives of the Christchurch City Council;
(c) whether other sources of funding or support are available, including assistance provided through industry or regional development policies and programmes of local authorities or central government;
(d) the objectives, roles and activities of any other organisation engaged in similar activities on Banks Peninsula.
3. NATURE AND SCOPE OF ACTIVITIES OF THE TRUST
The long term vision of the RDBPT is that Banks Peninsula is restored to its traditional status as Te Pataka o Rakaihautu – the storehouse that nourishes. This vision encompasses the following goals for Banks Peninsula:
a rich biodiversity; all streams are re-vegetated; the lakes and rivers flow with clean water; people are active in their care of the environment; ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 261
it is regarded as a special recreation place and is actively but respectfully used by people; people of Banks Peninsula are prospering and passionately participate in engaged conservation; there is a walkway right around Banks Peninsula connecting all communities; a centre for environmental education and creative environmental thinking is established; people describe Banks Peninsula as an Ecological Island.
The RDBPT cannot achieve these goals on its own or in the short term. Instead, the RDBPT will focus on acting as a facilitator, conduit and connector - to assist groups and projects which have aims that align with the objects of the RDBPT.
The RDBPT has been established to honour the memory of Rod Donald and his commitment to the Banks Peninsula area. Therefore, the RDBPT’s hallmark will be entrepreneurship and practical achievement, these were important values to Rod Donald. The RDBPT’s funds will be well husbanded and will be used to achieve things that individual groups and projects cannot achieve on their own.
The “Performance Indicators” section of this SoI sets out the initial goals of the RDBPT. These Performance Indicators reflect the initial actions that the RDBPT will take towards achieving the RDBPT’s long term vision.
Four key pillars will underpin the Trust as it works on projects to achieve these goals. These pillars are:
Access Knowledge Partnership Biodiversity
4. CORPORATE GOVERNANCE STATEMENT
This statement gives readers an overview of RDBPT’s main corporate governance policies, practices and processes to be adopted or followed by the RDBPT Trustees.
Role of the Trustees
The Trustees will manage the affairs of RDBPT in accordance with their legal obligations, the objectives of RDBPT and the terms of the RDBPT Trust Deed.
In addition the Trustees’ decisions will reflect the following values and principles:
Leading – the RDBPT should be a trusted and credible body making unique and courageous decisions and instigating projects
Linking – the RDBPT will focus on the big picture issues of Banks Peninsula and link people and projects.
Influencing – the RDBPT will engage with existing people and groups, supporting their passion for Banks Peninsula.
Enhancing – the RDBPT will work as an entrusted steward/guardian enhancing the historic work of previous generations. ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 262
Enduring – The funds and work of the Trust are to be used to create an enduring legacy for the Peninsula
The Trust will adhere to the following principles in its own work and partnerships: Respect and engage with the Peninsula community High trust relationships Transparency between partners No surprises, full disclosure Behave in an ethical manner Be well documented Have a process for dispute resolution and exiting Be formal in its processes – things properly approved and documented. Have clear benefits for the Peninsula community
Responsibility to Settlor i. Statement of Intent
In accordance with the Local Government Act 2002, the RDBPT will submit an annual draft Statement of Intent (SoI) to the Council for consultation and approval. The SoI will set out the RDBPT’s overall objectives, intentions and performance targets. ii. Information flows
The Trustees will aim to ensure that the Council is informed of all major developments affecting the RDBPT’s state of affairs. Information will be communicated to the Council through the RDBPT by periodic reports and through both the annual report and the half-yearly report.
The RDBPT will endeavour to operate on a “no surprises” basis with regard to all issues of relevance to the Settlor. Early notice will be given to the Settlor of issues that arise requiring its consent.
Trustees
Claudia Reid 3/14 Andover Street, Merivale Christchurch 8014
Stewart Miller 7 Heaphy Court Rolleston 7614
Garry Moore 103 Warrington Street Mairehau Christchurch 8013
Stuart Wright-Stow 255 Okuti Valley Road Little River 7591 ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 263
Tutehounuku (Nuk) Korako PO Box 210 Lyttelton
Nicola Shirlaw 236 Wilsons Road Waltham Christchurch 8023
Simon Mortlock PO Box 13 474 Christchurch 8141
Subsidiary and Monitored Companies
The RDBPT has no investments in other companies.
Financial Results
The Trustees will receive and review the RDBPT’s financial and other reports regularly, and will provide financial statements to the Council on a 6 monthly basis.
Distributions
The Trust has developed an investment policy based on the eventual distribution of the entire capital fund. The rate and method by which this distribution is to be achieved will depend on the emergence of opportunities matching the Trust’s objectives. In order to provide some working guidelines, the Trust has invested its funds and planned its operational arrangements with the view to expending up to $1,385,000 (approximately 40% of its original capital by the year 2017 and the remainder in years to follow. For the purpose of financial forecasting this has been apportioned into an even annual capital spending sum of $346,250. In practice the amounts spent will be determined by the availability of suitable projects that leave an enduring legacy for Banks Peninsula.
The Trust has determined that income derived from the capital fund will be used to cover its operational expenses and minor projects that do not leave an enduring legacy.
In the financial year 2012/13 the Trust has committed three years of grant funding to two partner organisations, the Banks Peninsula Conservation Trust and Orton Bradley Park from its annual income totalling $50,000 per annum. These organisations have aims that align with the Trust and the funding is aimed at assisting them to achieve financial sustainability.
5. ACCOUNTING POLICIES
The RDBPT will adopt accounting policies that are consistent with New Zealand International Financial Reporting Standards (NZ IFRS) and generally accepted accounting practice. A summary of the current accounting policies is attached in Appendix 2.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 264
Differential Reporting
The RDBPT is a qualifying entity within the Framework of Differential Reporting. The differential reporting option is available to the Trust as it is not large within the meaning of this term as set out in the Framework.
The Trust has taken advantage of all differential reporting concessions available to it.
The financial statements are prepared on the basis of historical cost, except for the revaluation of certain non-current assets.
6. PERFORMANCE TARGETS AND MEASURES
Financial Performance Targets The financial performance targets for the Trust are as follows
2013/14 2014/15 2015/16 Operating Surplus Revenue 143,847 130,055 116,282 Operational expenditure 45,000 45,900 46,818 Committed grants 50,000 50,000 50,000 Minor projects 30,000 30,600 31,212
Operating Surplus/(Deficit) 18,847 3,555 (11,748)
Trusts Funds Opening funds 3,535,000 3,207,597 2,864,902 Operating Surplus/(Deficit) 18,847 3,555 (11,748) Capital grants and project 346,250 346,250 346,250 expenditure*
Closing balance 3,207,597 2,864,902 2,506,904
*Note that in line with the Trust’s Investment policy the capital expenditure forecast is based on the aim of investing $1,385,000 over the next 4 years in projects which leave an enduring legacy. This is unlikely be spread evenly over the 4 years as shown in the forecast, as it will depend on the development of the Trust’s strategies and availability of matching opportunities. The even spread shown above is done for the purpose of revenue forecasting and provides a reference point against which actual expenditure can be compared.
The Trustees will report financial results as set out below in the “Information to be Provided” section.
Other Performance Measures
In addition to the above financial performance measures, the RDBPT Trustees may use other measures to assess the RDBPT’s performance over the 2012/13 to 2014/15 financial years.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 265
Performance Indicators
Indicator 1 Achievement Inform the public and relevant interest Keep the News page on the Trust groups about on-going activities and website regularly updated with progress of the Trust information
Keep the Activities page on the Trust website updated with information on projects
Ensure the Documents pages on the Trust website has the latest approved versions of documents available
Contact people who have registered their interest with the Trust at least once per year with a progress update
Send Press releases to local media when significant events have occurred.
Monitor usage of the Trust website to assess whether it is effective as a communication medium.
Indicator 2 Achievement Develop relationships with, and gain the Continue to develop a list of key interest trust of, existing interest groups on Banks groups that the RDBPT would like to Peninsula with aims aligned to those of work with. the RDBPT, along with relevant government agencies and territorial Continue to meet with key contacts authorities. within the groups to discuss their projects and the manner in which the RDBPT can work with them.
Build strategic relationships with Peninsula runanga, starting with Te Hapu o Ngati Wheke (Rapaki).
Base strategic relationships on working together on projects.
Indicator 3 Achievement Invest the Trust fund prudently to Identify other bodies which have funds minimise risk to the capital while available for projects aligned with the achieving the aims of local and ethical objectives of the RDBPT, develop investment. In the longer term ensure that strategic relationships with these bodies the capital fund is invested or spent in with the aim of a 5:1 leverage on Trust ways that leave a long term legacy for the capital where possible. people of the Peninsula and visitors. Keep annual operating costs within the income generated from the invested funds.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 266
Indicator 4 Achievement The Trust has determined four key pillars In conjunction with Indicator 2, and the on which its projects will be based; pillars, continue adding to and reviewing Access, Knowledge, Partnerships and a list of the projects which form the key Biodiversity. Identify the key projects focus of the RDBPT in the short to supporting these pillars that the Trust medium term, and the assistance that wishes to be involved in on Banks the RDBPT will provide in respect to Peninsula over the next 2 years. these projects.
Develop a robust framework for reviewing projects to determine how they meet the four key pillars and the Trust objectives, ensure wise decision making and project execution.
Ongoing legacy costs of projects are included in the considerations.
Indicator 5 Achievement Provide tangible support for the key Continue developing the living walkway projects and leadership building the strategy document. Access pillar Enabling access to support the objectives of the strategy.
Deliver presentations to and build relationships with CCC and DOC at an operational staff, management and policy level. Base these around projects.
Make submissions to relevant policy documents.
Create a comprehensive inventory and map of walks on Banks Peninsula.
Progress the Lyttelton Head to Head walkway, including meeting with Te Hapu o Ngati Wheke (Rapaki).
Progress the concept of a hut on the Summit Walkway and investigate repairing the Packhorse hut,
Secure long term access on existing walks across private land in Akaroa.
Progress and celebrate the acquisition of the Saddle Hill reserve.
Determine location of Council property within the territory covered by the Trust and consider if it could be strategically better utilised.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 267
Indicator 6 Achievement Provide tangible support and leadership Support publication of books relating to for projects building the Knowledge pillar. the objectives of the Trust.
Identify other funders who can support projects.
Incorporate knowledge building into the Trust walking strategy.
Indicator 7 Achievement Provide tangible support for partners Work with key partners Banks Peninsula Conservation Trust and Orton Bradley Park to assist them toward achieving a greater degree of long term financial sustainability.
Ensure that the partnership arrangements entered into with other groups are formalised with a Memorandum of Understanding.
Indicator 8 Achievement Provide tangible support for biodiversity Improve the Trust’s access to expertise on biodiversity.
7. INFORMATION TO BE PROVIDED
Statutory Information Requirements i. Annual Statement of Intent
The RDBPT will provide this in accordance with Section 64(1) of the Local Government Act 2002. The Trustees will include any other information they consider appropriate. ii. Half yearly report
The RDBPT will provide a half yearly report in accordance with Section 66(1) of the Local Government Act 2002. This will comply with NZ IFRS and generally accepted accounting practice and include any other information the Trustees consider appropriate. iii. Annual report
The RDBPT will provide an annual report including audited financial and performance statements in accordance with Section 67 of the Local Government Act 2002. Again this will comply with NZ IFRS and generally accepted accounting practice and will include any other information the trustees consider appropriate.
The RDBPT will provide its annual reports to the Lyttelton/Mt Herbert and Akaroa/Wairewa Community Boards, for the information of the Community Boards.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 268
Other Information to Meet the Needs of the Council
The RDBPT will meet at least six monthly with the Councillor representing the Banks Peninsula ward and the Chairpersons of the Akaroa/Wairewa and Lyttelton/Mt Herbert Community Boards, to discuss the RDBPT’s activities. If called upon by the Council the RDBPT will meet with these representatives on a further two occasions in any one financial year.
8. ACQUISITION OF SHARES IN ANY COMPANY
The Trust will only acquire securities or debt shares in any company after having notified Council.
9. RATIO OF CONSOLIDATED TRUST FUNDS TO TOTAL ASSETS
The RDBPT’s funds equal its total assets, therefore the ratio of total trust funds to total assets is 1:1.
10. ESTIMATE OF DISTRIBUTIONS OF ACCUMULATED PROFITS AND CAPITAL RESERVES
The Trustees will explore options to attract funds from other sources to grow the trust fund and/or to serve the trust objectives.
The RDBPT will identify projects that it wishes to support. This support may be in the form of the distribution of accumulated profits or the through use of the capital. Any projects identified and the related estimated distributions of accumulated profits will be signalled in the RDBPT’s six monthly reports to the Council. The RDBPT will develop a distributions policy in regard to these distributions.
11. COMMERCIAL VALUE OF INVESTMENT
The commercial value of the investment is equal to the net assets of the RDBPT. The current asset of the RDBPT is approximately $3,636,519 cash (31 December 2012). The commercial value will be reviewed on a 6 monthly basis when the financial reports for the RDBPT are prepared.
12. ACTIVITIES FOR WHICH COMPENSATION IS SOUGHT FROM ANY LOCAL AUTHORITY
Currently there are no activities for which compensation will be sought from any local authority. ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 269
APPENDIX 1 - MAP OF DISTRICT ADMINISTERED BY THE FORMER BANKS PENINSULA DISTRICT COUNCIL
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 270
APPENDIX 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary is set out in a form consistent with the form in which the accounting policies will be set out when presented with the financial statements of RDBPT. No financial statements are included with this SOI.
Statement of Significant Accounting Policies a. Basis of financial statement preparation
The financial statements of the RDBPT have been prepared in accordance with New Zealand generally accepted accounting practice. They comply with the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) as appropriate for public benefit entities.
Differential Reporting The Trust is a qualifying entity within the Framework for Differential Reporting. The differential reporting option is available to the Trust as it is not large within the meaning of this term as set out in the Framework and is not publicly accountable. The Trust has taken advantage of all differential reporting concessions available to it.
The financial statements are prepared under the historical cost convention, as modified by the revaluation of investment properties.
The functional and presentation currency is New Zealand dollars, and all values are rounded to the nearest dollar. b. Revenue
Revenue is measured at the fair value of consideration received. Interest income is recognised using the effective interest method. c. Borrowing Costs
Borrowing costs are recognised as an expense in the period in which they are incurred. d. Income tax
The Inland Revenue Department (IRD) has confirmed that the Trust has charitable status for tax purposes and is therefore not liable for income tax. e. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits, and other short-term highly liquid investments with maturities of three months or less. f. Trade and other receivables
Trade and other receivables are initially measured at fair value and subsequently measured at amortised cost less impairment provision.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 271
g. Trade and other payables
Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost. h. Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis. i. Goods and Services Tax
The Rod Donald Banks Peninsula Trust is not registered for GST. All amounts stated are inclusive of GST where applicable. j. Provisions
A provision is recognised in the balance sheet when the Trust has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits, the amount of which can be reliably estimated, will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the obligation. k. Critical accounting estimates and assumptions
In preparing these financial statements the Trust has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 272
APPENDIX 3 – INVESTMENT STRATEGY
This appendix lays out the Rod Donald Banks Peninsula Trust Investment Principles Available funds Method to achieve principles Proposed annual expenditure budget
Trust’s Investment Principles The strategy is aimed at the 5 year period from the start of the financial year on July 1 2012 to the end of the financial year on June 31, 2017. It incorporates the following principles: In support of its Trust Deed and Statement of Intent, the Trust will invest funds locally and ethically. Locally means in the first instance Canterbury and then New Zealand, but not overseas. Ensure a prudent spread of investments so that risk on the capital fund is minimised. To limit risk the following hierarchy of conditions will apply to investments falling outside of the Christchurch City Council Investment Policy; a. no more than 30% of fixed income investments will be in instruments falling outside of the Christchurch City Council Investment Policy, b. no more than 15% of the total fixed income funds will be invested in non credit Non Bank Deposit Takers (NBDT), c. no more than 7% of the total fixed income funds will be invested in any single non-credit rated NBDT, d. no more than $250,000 will be invested with any single non-rated NBDT, and e. any such investments should be assessed by the Investment Sub- Committee for credit risk acceptability. The Trust will only acquire securities or debt shares in any company after having notified Council. Ensure funds are available to cover the annual basic running costs of the Trust. Have some funding available annually for Trust minor projects and grants to partners. Funding for the Trust’s operational costs, minor projects and grants will be derived from income. Expend up to 40% of the capital in investments over the 5 year period July 1, 2012 to June 31, 2017 years in ways that will leave a long term legacy. Aim to achieve a multiplier effect of 5:1 through partnerships with other organisations – i.e. for every $1 the Trust invests, it would look for $4 to come from partners or other sources. Retain approximately 60% of the capital for the next period. ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 273
Any decisions on re-investment are to be approved by the Board with the proviso that if the Board is not available a decision can be made by the Secretary in conjunction with the Chair or another Board member if the Chair is not available and will need to be affirmed at the next Board meeting. Available Funds The following table reflects the Trust’s available cash and investments as of February 2013. Bank Amount Capital Allocated for BNZ cash 135,640 Kiwibank 50,000 Pledged to publication of Plant Life of Banks Peninsula Kiwibank 1,135,000 Earmarked for use 2017 or earlier subject to suitable projects Prometheus 250,000 Earmarked for use 2017 or earlier subject to Finance suitable projects Kiwibank 1,400,000 Earmarked for use after 2017 TSB $500,000 Earmarked for use after 2017 Heartland/CBS $250,000 Earmarked for use after 2017 Summary $130,000 Current liabilities and forecast amount to be spent by end of 2012-13 financial year $50,000 Earmarked for book loan $1,385,000 Total earmarked as first 5 years of capital funds $2,150,000 Total earmarked for use in later years Total Feb 2012 $3,720,640 Current total funds in February 2013 Total July 2013 $3,535,000 Amount forecast as available at start of 2013-14 financial year
Methods to achieve principles The total capital sum forecast as available for use from the start of the financial year on July 1, 2013 is $3,535,000. $1,385,000 (39%) is earmarked as funds for expenditure over the next four years (the remainder of the first five year period). The remaining $2,150,000 (61%) is earmarked for the next period.
As funds mature they will be reinvested using the principles to produce income for the Trust. A mix of longer and shorter term investments will be used to ensure that the Trust has access to sufficient capital funds each year to meet the demands of any projects that have been accepted and are in its forecast, or are pending. However, the Trust may break a longer term deposit if a sufficiently compelling opportunity arises and this cannot be avoided. The capital will be used on projects that leave an enduring legacy.
The annual operational expenditure of the Trust, its minor operational projects, and grants to assist with the operational activities of partner organisations will be funded from income.
ATTACHMENT 4 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 274
Annual Expenditure The proposed Annual expenditure includes the Trust’s annual operational expenditure and an allocation for minor project work, to be carried out either directly by the Trust or through grants to key partners.
Total annual budget Item Budgeted amount p.a. Annual operating expenditure $45,000 Grant to BPCT annually $25,000 Grant to OBP annually $25,000 Other minor project work $30,000 Total annual budget 125,000.00*
The Annual operating expenditure is based on the rates the Trust is currently paying for a Secretary/Project Manager 2 days per week, website hosting, accounting, auditing and insurance costs. Applying an assumption of 2% p.a. CPI inflation, this cost is expected to rise to $132,651 by 2017.
Estimated annual income
The Trust aims to fund its operational expenditure, minor projects and minor grants from its annual income. The annual income of the Trust for the remaining four years of the first period has been forecast based on the following assumptions; the income will be solely derived from interest on the investments, approximately 40% of the capital ($1,385,000 ) will be expended over the next four years to June 31, 2017, the capital will be depleted evenly at a nominal rate of $346,350 per annum, the $346,350 may be spent at the start of the year and therefore the model assumes that it attracts no interest the year in which it is nominated for spending, each investment will continue to attract the same interest rate This is an idealised forecast developed to demonstrate that the annual income should be sufficient to cover the annual expenditure. In practice the Trust is likely to depart from this idealised pattern as it will expend capital as and when appropriate opportunities emerge rather than at a set rate per annum. The forecasts given in this Investment Policy therefore provide a basis against which to assess such opportunities and determine the impact that capital expenditure will have on the annual income.
Forecast Income and expenditure Financial year Anticipated Operational Surplus/(Deficit) income budget 2013-14 143,846 125,000 18,846 2014-15 130,055 127,500 2,555 2015-16 116,281 130,050 (13,768)* * Surplus from the previous two years will be used to fund operational costs in 2015-16
RD/SOI/2014/Draft2‐3 19 ATTACHMENT 5 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 275
RICCARTON BUSH TRUST
STATEMENT OF INTENT FOR YEAR ENDING 30 JUNE 2014
1.0 Introduction
This Statement of Intent (SOI) is prepared in accordance with S.64(1) of the Local Government Act 2002.
The Riccarton Bush Trust is a Council Controlled Organisation for the purpose of the Local Government Act 2002.
The SOI specifies for the Riccarton Bush Trust, the objectives, the nature and scope of the activities to be undertaken and the performance targets and other measures by which the performance of the Riccarton Bush Trust may be judged in relation to its objectives, amongst other requirements.
The process of negotiation and determination of an acceptable SOI is a public expression of the accountability relationship between the Riccarton Bush Trust and the Christchurch City Council.
The SOI is reviewed annually with the Council and covers a three year period.
The office of Riccarton Bush Trust is 16 Kahu Road, Christchurch. Contact details for both the Chairman and the Manager are as follows:
Chairman Manager Address 9 Rhyl Place, CHCH 16 Kahu Road, Telephone 03 351-6928 03 341-1018 no. Email [email protected] [email protected]
2.0 Objectives
a) The Riccarton Bush Trust Vision is “That Riccarton Bush, House and Grounds is the premier natural and cultural heritage site in Christchurch and Canterbury.”
b) The Riccarton Bush Trust’s key objectives are:
To protect and enhance the indigenous flora, fauna and ecology of Riccarton Bush.
To conserve Deans Cottage, Riccarton House and their grounds with Riccarton Bush and the Deans family history.
To encourage public use and participation of the reserve and to inform visitors about the natural, Maori, and colonial heritage of Christchurch.
3.0 Nature and Scope of Activities 1 ATTACHMENT 5 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 276
The Riccarton Bush Trust administers a 6.373 hectare native bush remnant gifted by the Deans family to the people of Canterbury in 1914. The Trust also administers Riccarton House (built from 1856-1900) and its 5.41 hectares of grounds, including Deans Cottage the oldest house on the Canterbury Plains, built in 1843, purchased by the Trust from the Deans family in 1947. Incorporated under a 1914 Act of Parliament, the Riccarton Bush Trust is a Council Controlled Organisation (CCO) with operating funds provided by the council in accordance with the Riccarton Bush Amendment Act 2012 and which are used to maintain and operate the Riccarton Bush, Riccarton House, Deans Cottage and the grounds.
Part of Riccarton House is licensed to a commercial caterer and is used as a restaurant and event centre including wedding receptions.
Riccarton House is currently closed for earthquake repairs which are scheduled to be completed during the term of this SOI. Once repairs have been completed, much of Riccarton House will be refurnished in 1900’s Victorian style and paid guided Heritage Hours Tours will be available on a daily basis except Saturdays and Public Holidays.
Deans Cottage is open daily to the public at no charge, displaying life at Riccarton in the 1840’s.
Riccarton Bush, the sole remnant of Kahikatea alluvial floodplain forest on the Canterbury Plains, has a predator proof fence and is open daily to the public at no charge. The Trust reserves the right to charge for organised eco-tours involving Riccarton Bush.
Governance
The Christchurch City Council appoints five of the eight member Trust Board. The other three members are appointed by the Deans family (x2) and the Canterbury Branch of the Royal Society NZ (x1). The board has the power to appoint a 9th Trustee from time to time for a term to be decided by the Board.
The functions of the Board are:
a) Appoint a chief executive officer: b) Reappoint or replace a chief executive officer: c) Specify the functions of the chief executive officer: d) Establish broad lines of policy consistent with this act (and amendments) for the guidance of the Chief Executive Officer: e) Ensure that the Board’s assets are maintained in good order and condition: f) Ensure that the Riccarton Bush is run effectively and efficiently.
Ratio of Shareholders’ funds to total assets: This ratio is not applicable as the total assets of the Riccarton Bush Trust are vested in the Trust.
The forecast capital structure for the next three years is:
2013/14$m 2014/15$m 2015/2016 Equity 6.373 6.38 7.389 2 ATTACHMENT 5 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 277 Debt ------
Accounting Policies
The Riccarton Bush Trust has adopted accounting policies that are consistent with generally accepted accounting practice in New Zealand (NZ GAAP). They comply with New Zealand International Financial reporting standards (NZIFRS) and other applicable Financial Reporting Standards, as appropriate for public benefit entities.
Differential Reporting
The Riccarton Bush Trust is a qualifying entity within the Framework of Differential Reporting. The differential reporting option is available to the Trust as it is not large within the meaning of this term as set out in the Framework.
The Trust has taken advantage of all differential reporting concessions available to it.
The financial statements are prepared on the basis of historical cost, except for the revaluation of certain non-current assets.
Performance Targets
Financial performance Targets The financial performance targets for the Trust are as follows:
2013/14 2014/15 2015/16 $(000) $(000) $ (000) Revenue 383 412 420
Operating 378 416 419 Expenses Operating surplus/deficit 5 (4) 1 before depreciation
Note: 1. The figures shown are a slight departure from the LTCCP in order to recognise the current economic situation. 2. Building asset insurance excess payments of approximately $47,000 will be capitalised. Project Performance Targets
Target Performance Measure 2013/2014 1. Management Plan for Riccarton Draft Management Plan House and Bush as required by available for public the new amendment to the consultation by December Riccarton Bush Act. 2013.
2. Upgrade of heating for Riccarton New heating plant installed House. and operating in Riccarton House by December 2013. 3 ATTACHMENT 5 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 278
3. Upgrade of commercial kitchen. Upgraded commercial kitchen operational by December 2013.
4. Refurbish Morning Room Structural refurbishment of Morning Room completed by December 2013.
Environmental and Social Performance Targets
Target Performance Measure 2013/2014 1. Resolve non-performing Council Council administered asset administered Asset Waterways in waterways in and adjacent and adjacent to Riccarton Bush. to Riccarton Bush providing adequate drainage to the bush by December 2013.
2. Minimise the number of feral The problem of feral pigeon pigeons in Riccarton House. faeces on walkways eliminated by June 2014.
3. To provide a record of the A record of the Riccarton response by the Trust to the Bush Trust response to the seismic events of 2010/2011. 2010/2011 seismic events being available for future generations as part of the social history of the site by June 2014.
4. To have Riccarton Riccarton House open to House fully open to the public as the public by 1 April 2014. soon as practical.
Information to be provided to the Council
An Annual Report will be submitted to the Council. The Annual Report will include audited financial statements, including the report of the auditor, and such other details as are necessary to permit an informed assessment of the Trusts performance and financial position during the reporting period provided.
Half yearly reports will also be provided to the Council. These reports will contain unaudited information and comply with NZ IAS 34.
Annual reports will outline the Trust’s objectives and performance in terms of:
Financial ) Operational ) inputs, outputs and outcomes Environmental, and ) Social )
The Statement of Intent will be submitted to the Council for consultation annually, as required by the Local Government Act 2002. The Trustees will
4 ATTACHMENT 5 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 279 include any other information they consider appropriate. Where appropriate, revised forecasts will be submitted to the Council.
The Trust will operate on a “no surprises” basis in respect of significant “Council interest” related matters, to the extent possible in the context of commercial sensitivity and confidentiality obligations.
The Trust will provide information requested by the Council in accordance with the requirement of the Local Government Act 2002.
Compensation sought from local authority:
For 2013/2014 the Trust will receive statutory funding in the sum of $286,035 Amendment Act 2012 in accordance with the Riccarton Bush Amendment Act 2012 to assist with the operation and management of the Riccarton Bush.
Capital grants are also negotiated with the Council.
2009/2010 $110,000 I.D.P.
For 2010/11- 82,000 comprising $10,000 grounds landscaping; $5000 sewer upgrade; $25,000 downstairs carpet; $2000 bush interpretation; $40,000 I.D.P.
For 2011/12 $70,000 comprising $10,000 morning room finish; $50,000 morning room; $10,000 truck.
For 2012/13/14 Not yet approved.
Note: The Capital Grants in the published LTCCP have been re-prioritised so as to complete elements of the Integrated Development Project (I.D.P.) which have a higher community benefit and to fit in with earthquake repairs.
General Information
Distributions: The Riccarton Bush Trust was registered as a charitable entity under the Charities Act 2005 on 26 May 2008 and as such, there will be no distributions.
Acquisition or Shares: The Riccarton Bush Trust has no intention to acquire shares.
Commercial Value: Given the charitable status of the Riccarton Bush Trust, the concept of the Trust having a commercial value is not applicable.
5 ATTACHMENT 5 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 280 Forecast Equity Worksheet for 2015/2016
Total Equity @ 30/06/2012 7,588,244 Operating Deficit after Depreciation (LTP figures) 12/13 (24,349) Operating Deficit after Depreciation (LTP figures) 13/14 (30,199) Operating Deficit after Depreciation (LTP figures) 14/15 (75,326) Operating Deficit after Depreciation (LTP figures) 15/16 (68,976) Forecast equity @ 30/06/2016 7,389,394
6 ATTACHMENT 6 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 281
Civic Building Limited- Comparison between 2012/13 and 2013/14 SOI
2012/13 SOI 2013/14 SOI
Target Performance Measure Target Performance Measure Operational Performance Targets Project Performance Targets Meet the financial targets contained Budgeted key performance indicators are Meet the financial targets contained Budgeted key performance indicators are within this SOI. met or exceeded. within this SOI. met or exceeded. Manage the investment in a Ensure the Civic building is managed in Manage the investment in a Ensure the Civic building is managed in commercially astute and prudent accordance with the management commercially astute and prudent accordance with the management manner. agreement. manner. agreement. Environmental and Social Performance Environmental and Social Performance Targets Targets The Civic Building was designed to Ensure the Civic Building operates in a The Civic Building was designed to Ensure the Civic Building operates in a achieve a high standard in terms of manner that preserves Green Star 6 achieve a high standard in terms of manner that preserves Green Star 6 environmental and energy accreditation features. environmental and energy accreditation features. sustainability. sustainability.
Financial Performance Targets Financial Performance Targets 2012/13 2013/14 2014/15 2013/14 2014/15 2015/16 $000 $000 $000 $000 $000 $000 Revenue Revenue Interest - Finance Lease 4,061 4,078 4,046 Interest - Finance Lease 3,688 3,656 3,621 Other income 849 873 896 Interest - Other 138 101 65 4,910 4,951 4,942 Other income 1,296 1,321 1,346 Expenses 5,122 5,078 5,032 Finance Costs 5,459 5,459 5,459 Expenses Other Expenses 1,059 1,089 1,119 Finance Costs 5,312 5,202 5,165 6,518 6,548 6,578 Other Expenses 977 1,003 1,031 6,289 6,205 6,196 Profit/(loss) before income tax (1,608) (1,597) (1,636) Profit/(loss) before income tax (1,167) (1,127) (1,164) Income tax expenses / (income) (1,152) (1,065) (1,008) Profit/(loss) for period (456) (532) (628) Income tax expenses / (income) (327) (367) (379) Profit/(loss) for period (840) (760) (785)
Highlighted targets are not in the 2013/14 SOI
Highlighted targets are not in the 2012/13 SOI.
ATTACHMENT 6 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 282
Ratio of shareholders funds to total assets Ratio of shareholders funds to total assets 2012/13 2013/14 2014/15 2013/14 2014/15 2015/16 -12.0% -13.0% -14.2% -11.6% -13.2% -14.8%
Capital Structure Capital Structure 2012/13 2013/14 2014/15 2013/14 2014/15 2015/16 $ million $ million $ million $000 $000 $000 Uncalled Capital 10.0 10.0 10.0 Uncalled Capital 10,000 10,000 10,000 RPS Shares 6.2 6.2 6.2 RPS Shares 6,188 6,188 6,188 Borrowing from Council 59.2 59.2 59.2 Borrowing from Council 57,688 56,488 56,088 Total assets 61.0 60.5 59.9 Finance lease asset 51,694 51,215 50,701 Total assets 60,269 58,646 57,732
Differences between SOIs
The 2013/14 SOI includes the repayments on the $59.2 million loan from Council. Section 6 of the draft SOI shows what the financial performance targets would have been were no loan repayments made.
ATTACHMENT 7 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE - 8. 3. 2013 283
Tuam Limited - Comparison between 2012/13 and 2013/14 SOI
2012/13 SOI 2013/14 SOI
Operational Performance Targets Operational Performance Targets Performance Target Performance Measure Performance Target Performance Measure Ensure Tuam meets the financial targets Budgeted key performance indicators Tuam will repay its loan to Council. Tuam will repay its outstanding debt to contained within this SOI. are met or exceeded. Council on receipt of the proceeds from the The company meets all relevant legislative No breaches of legislative or contractual sale of its properties. and contractual requirements. requirements are recorded. The company meets all relevant No breaches of legislative or contractual legislative and contractual requirements are recorded. Highlighted targets are not in the 2013/14 SOI requirements.
Financial Performance Targets Highlighted targets are not in the 2012/13 SOI.
2012/13 2013/14 2014/15 Financial Performance Targets $000 $000 $000 Income As Tuam is still in the process of negotiating the sale price for its property with Rental income 49 51 54 the CCDU and settling the insurance claims on its buildings, it cannot Other income 26 26 26 accurately determine the financial implications from this transaction. 75 77 80 Expenses The remaining surplus funds after repaying the loan owed to the Council will Interest 341 341 341 be invested in cash deposits while the Company investigates other Other Expenses 187 196 206 commercial property investments. Depreciation 000 528 537 547
Net surplus/(deficit) before tax (453) (460) (467) Differences between SOIs Subvention (Receipt) / Payment (127) (129) (131) Net surplus/(deficit) after tax (326) (331) (336) The significant difference in the SOIs is the sale of Tuam’s property to the CCDU. This impacts the objective of the Company and the expected financial Ratio of shareholders funds to total assets performance targets. 2012/13 2013/14 2014/15 50.00% 48.00% 46.00% Following the sale of the property the Company will look to invest in commercial property that is consistent with the Council’s strategies and plans.
Capital Structure
2012/13 2013/14 2014/15 $000 $000 $000 Equity 18,135 18,135 18,135 Retained earnings (13,371) (13,703) (14,039)
Debt 4,750 4,750 4,750 Total assets 9,528 9,199 8,862 ATTACHMENT 8 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 284
The World Buskers’ Festival Trust - Comparison between 2012/13 and 2013/14 SOI
2012/13 SOI 2013/14 SOI
Operational Performance Targets Operational Performance Targets
Performance Target Performance Measure Performance Target Performance Measure Visitor attendance Attract at least 300,000 visits Visitor attendance Attract at least 300,000 visits Customer satisfactions 90% of visitors are satisfied with the festival Customer satisfactions 90% of visitors are satisfied with the festival (independent Festival Development Deliver programme at least the same size as the 2011 research on a three year cycle) programme. Festival Development Festival business plan to include succession planning for Generate surplus for future festival development (refer key roles to reduce risk of non-performance. financial targets below) Any surplus generated to be for future festival development (refer financial targets below)
Financial Performance Targets Financial Performance Targets 2012/13 2013/14 2014/15 2013/14 2014/15 2015/16 Revenue $1,815,000 $1,887,000 $1,963,000 Revenue $1,815,000 $1,815,000 $1,815,000 Expenses $1,789,000 $1,860,000 $1,934,000 Expenses $1,815,000 $1,814,000 $1,814,000 Surplus $0 $1,000 $1,000 Surplus $26,000 $27,000 $29,000
Compensation sought from the Council $230,000 $230,000 $230,000 Highlighted targets are not in the 2013/14 SOI
Highlighted targets are not in the 2012/13 SOI.
Differences between SOIs The World Buskers’ Festival Trust has added further information to clarify two performance targets. A new target has been added for Festival Development.
The financial performance targets differ from the 2012-13 SOI reflecting current expectations for sponsorship and festival revenue and the expected costs of holding the festival.
In accordance with the requirement of the Local Government Act 2002 the 2013-14 SOI now states the amount of grant income that the Trust is seeking from the Council over the period of the SOI. ATTACHMENT 9 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 285
Rod Donald Banks Peninsula Trust - Comparison between 2012/13 and 2013/14 SOI
2012/13 SOI 2013/14 SOI
Target Performance Measure Target Performance Measure Indicator 1 Indicator 1 Inform the public and relevant interest Finalise a communications and advertising policy Inform the public and relevant interest Keep the News page on the Trust website regularly groups about on-going activities and for the RDBPT. groups about on-going activities and updated with information. progress of the Trust progress of the Trust Develop a branding for the Trust and a website Keep the Activities page on the Trust website that enables easy upload of Trust documents for updated with information on projects. sharing. Ensure the Documents pages on the Trust website Share the report of the Stocktake project and on- have the latest approved versions of documents going progress with groups involved. available. Indicator 2 Develop relationships with, and gain the Develop a list of key interest groups that the Contact people who have registered their interest trust of, existing interest groups on Banks RDBPT would like to work with. with the Trust at lease once per year with a progress Peninsula with aims aligned to those of the update. RDBPT, along with relevant government Continue to meet with key contacts within the agencies and territorial authorities. groups to discuss their projects and the manner in Send Press releases to local media when significant which the RDBPT can work with them. events have occurred. Indicator 3 Invest the Trust fund prudently to minimise Adopt the draft investment policy and strategy for Monitor usage of the Trust website to assess risk to the capital while achieving the aims the RDBPT. whether it is effective as a communication medium. of local and ethical investment. In the longer Indicator 2 term ensure that the capital fund is invested Identify other bodies which have funds available Develop relationships with, and gain the Continue to develop a list of key interest groups that or spent in ways that leave a long term for projects aligned with the objectives of the trust of, existing interest groups on Banks the RDBPT would like to work with. legacy for the people of the Peninsula and RDBPT, develop strategic relationships with these Peninsula with aims aligned to those of the visitors. Keep annual operating costs within bodies with the aim of a 5:1 leverage on Trust RDBPT, along with relevant government Continue to meet with key contacts within the groups the income generated from the invested capital where possible. agencies and territorial authorities. to discuss their projects and the manner in which the funds. RDBPT can work with them. Indicator 4 The Trust has determined three key pillars In conjunction with Indicator 2, and the pillars, Build strategic relationships with Peninsula runanga, on which its projects will be based; Access, establish a list of the projects which will be the key starting with Te Hapu o Ngati Wheke (Rapaki). Knowledge and Partnerships. Identify the focus of the RDBPT in the short to medium term, key projects supporting these pillars that the and the assistance that the RDBPT will provide in Base strategic relationships on working together on Trust wishes to be involved in on Banks respect to these projects. projects Peninsula over the next 3 years. Indicator 3 Develop a distributions policy in respect to the Invest the Trust fund prudently to minimise Identify other bodies which have funds available for distributions to be made to any projects identified. risk to the capital while achieving the aims projects aligned with the objectives of the RDBPT, Indicator 5 of local and ethical investment. In the longer develop strategic relationships with these bodies Provide tangible support for the key projects Development of a walkway strategy. term ensure that the capital fund is invested with the aim of a 5:1 leverage on Trust capital where and leadership building the Access pillar or spent in ways that leave a long term possible. Enabling access to support this strategy. legacy for the people of the Peninsula and visitors. Keep annual operating costs within the income generated from the invested funds.
ATTACHMENT 9 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 286
2012/13 SOI (continued) 2013/14 SOI (continued) Indicator 4 Targets continue on the next page The Trust has determined three key pillars In conjunction with Indicator 2, and the pillars, on which its projects will be based; Access, continue adding to and reviewing a list of the Knowledge and Partnerships. Identify the projects which form the key focus of the RDBPT key projects supporting these pillars that the in the short to medium term, and the assistance Trust wishes to be involved in on Banks that the RDBPT will provide in respect to these Peninsula over the next 2 years. projects.
Develop a robust framework for reviewing projects to determine how they meet the four key pillars and the Trust objectives, ensure wise decision making and project execution.
Ongoing legacy costs of projects are included in the considerations. Indicator 5 Provide tangible support for the key projects Continue developing the living walkway strategy and leadership building the Access pillar document.
Enabling access to support the objectives of the strategy.
Deliver presentations to and build relationships with CCC and DOC at an operational staff, management and policy level. Base these around projects.
Make submissions to relevant policy documents.
Create a comprehensive inventory and map of walks on Banks Peninsula.
Progress the Lyttelton Head to Head walkway, including meeting with Te Hapu o Ngati Wheke (Rapaki).
Progress the concept of a hut on the Summit Walkway and investigate repairing the Packhorse hut.
Secure long term access on existing walks across private land in Akaroa.
Progress and celebrate the acquisition of the Saddle Hill reserve.
Determine location of Council property within the territory covered by the Trust and consider if it could be strategically better utilised.
ATTACHMENT 9 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 287
2012/13 SOI (continued) 2013/14 SOI (continued) Indicator 6 Indicator 6 Provide tangible support and leadership for Explore and define how to do this. Provide tangible support and leadership for Support publication of books relating to the projects building the Knowledge pillar. projects building the Knowledge pillar. objectives of the Trust. Identify other funders who can support projects. Indicator 7 Identify other funders who can support projects. Provide tangible support for partners Identify some key projects that others have initiated that align with the RDBPT objectives Incorporate knowledge building into the Trust and explore how the RDBPT can support these walking strategy. with either funding or knowledge and broker Indicator 7 and leverage its SOI objectives. Provide tangible support for partners Work with key partners Banks Peninsula Conservation Trust and Orton Bradley Park to Ensure that the partnership arrangements assist them toward achieving a greater degree of entered into with other groups are formalised long term financial sustainability. with a Memorandum of Understanding . Ensure that the partnership arrangements entered into with other groups are formalised with a Memorandum of Understanding. Financial Performance Targets Indicator 8 2012/13 2013/14 2014/15 Provide tangible support for biodiversity. Improve the Trust’s access to expertise on $000 $000 $000 biodiversity. Operating Surplus Financial Performance Targets Revenue 149,066 125,167 109,144 2013/14 2014/15 2015/16 Operating Expenses (43,329) (44,521) (45,412) $000 $000 $000 Operating surplus/(deficit) 105,737 80,646 63,732 Operating Surplus Revenue 143,847 130,055 116,282 Forecast Cashflow Operational expenditure (45,000) (45,900) (46,818) Opening balance 3,702,193 3,597,930 3,290,601 Committed grants (50,000) (50,000) (50,000)
Interest income 149,066 125,167 109,144 Minor projects (30,000) (30,600) (31,212) Operating expenditure (43,329) (44,521) (45,412) Operating surplus/(deficit) 18,847 3,555 (11,748) Annual minor projects (60,000) (60,000) (60,000)
Project expenditure (150,000) (327,975) (327,975) Trusts Funds Total Expenditure (253,329) (432,496) (433,387) Opening funds 3,535,000 3,207,597 2,864,902 Closing balance 3,597,930 3,290,601 2,966,358 Operating surplus/(deficit) 18,847 3,555 (11,748) Capital Grants and project expenditure* (346,250) (346,250) (346,250) Closing balance 3,207,597 2,864,902 2,506,904 Highlighted targets are not in the 2013/14 SOI * In line with the investment policy the capital grants and project expenditure forecast is based on the aim of investing $1.385 million over the next four years in projects which leave an enduring legacy. This is unlikely to be spread evenly over the three years of the forecast as expenditure it is dependent on the development of the RDBPT’s strategies and the availability of matching opportunities. The even spread shown above provides a reference point against which actual expenditure can be compared.
Highlighted targets are not in the 2012/13 SOI. ATTACHMENT 9 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 288
Differences between SOIs
Operational performance targets The differences in the operating performance targets represent the expected achievements of the RDBPT and new targets as it develops its operational strategies.
Financial Performance targets The financial performance targets are consistent between the 2012/13 SOI and draft 2013/14. The changes highlighted are more in how the targets are expressed.
ATTACHMENT 10 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 289
Riccarton Bush Trust - Comparison between 2012/13 and 2013/14 SOI
2012/13 SOI 2013/14 SOI
Target Performance Measure Target Performance Measure Project Performance Targets Project Performance Targets Management Plan for Riccarton House Draft Management Plan available for Management Plan for Riccarton House Draft Management Plan available for public and Bush as required by the new consultation by December 2012. and Bush as required by the new consultation by December 2013. amendment to the Riccarton Bush Act amendment to the Riccarton Bush Act Upgrade of heating for Riccarton New heating plan installed and operating Upgrade of heating for Riccarton New heating plan installed and operating in House. in Riccarton House by June 2013. House. Riccarton House by December 2013. Upgrade of commercial kitchen. Upgraded commercial kitchen operational Upgrade of commercial kitchen. Upgraded commercial kitchen operational by by June 2013. December 2013. Replace on site waste bins with eco- Eco-friendly waste collection system in Refurbish Morning Room. Structural refurbishment of Morning Room friendly system allowing for separation place by June 2013. completed by December 2013. of rubbish /recycling / doggie do’s. Environmental and Social Performance Environmental and Social Performance Targets Targets Resolve non-performing Council Council administered asset waterways in Continue the successful partnership 5 Juvenile Great Spotted Kiwi crèche in administered Asset Waterways in and and adjacent to Riccarton Bush providing with DOC and Operation Nest Egg and Riccarton Bush during the 2012 adjacent to Riccarton Bush. adequate drainage to the bush by December the Kiwi Crèche in Riccarton Bush. Winter/Spring. 2013. Resolve non-performing Council Council administered asset waterways in Minimise the number of feral pigeons The problem of feral pigeon faeces on administered Asset Waterways in and and adjacent to Riccarton Bush providing in Riccarton House. walkways eliminated by June 2014. adjacent to Riccarton Bush. adequate drainage to the bush by June To provide a record of the response by A record of the Riccarton Bush Trust 2013. the Trust to the seismic events of response to the 2010/211 seismic events Qualified survey of Bush conditions Qualified survey of Bush and trends 2010/2011. being available for future generations as part and trends. completed by June 2013. of the social history of the site by June 2014. To provide a record of the response by A record of the Riccarton Bush Trust To have Riccarton House fully open to Riccarton House open to the public by 1 the Trust to the seismic events of response to the 2010/2011 seismic events the public as soon as practical. April 2014. 2010/2011. being available for future generations as part of the social history of the site by Highlighted targets are not in the 2012/13 SOI. June 2014.
Highlighted targets are not in the 2013/14 SOI
ATTACHMENT 10 TO CLAUSE 10 - CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013 290
Financial Performance Targets Financial Performance Targets 2012/13 2013/14 2014/15 2013/14 2014/15 2015/16 $000 $000 $000 $000 $000 $000 Revenue 360 423 421 Revenue 383 412 420 Operating Expenses 375 430 414 Operating Expenses 378 416 419 Operating surplus/deficit Operating surplus/deficit (15) (7) 7 before depreciation before depreciation 5(4)1
Building asset insurance excess payments of approximately $47,000 will be Building asset insurance excess payments of approximately $47,000 will be capitalised. capitalised.
2012/13 2013/14 2014/15 2013/14 2014/15 2015/16 $ million $ million $ million $ million $ million $ million Equity 6.380 6.373 6.380 Equity 6.373 6.380 7.389 Debt 000Debt 000
Differences between SOIs
Non-financial performance targets A number of the project performance targets relating to the repair of Riccarton House have had the completion dates adjusted to reflect the amended completion date of the repairs to the house. The Trust has also added in 2013/14 a project to refurbish the Morning Room in Riccarton House.
In 2012/13 the Trust was involved with DOC in creching Kiwi in Riccarton Bush. A review of the programme by DOC has resulted in a decision by DOC to no longer crèche kiwi in the bush.
Financial Performance targets The forecast financial performance targets of the Trust do differ slightly from what was expected at the time of preparing the 2012/13 SOI and reflect a better understanding of likely revenues and expenses with a reopened Riccarton House.
Capital Grants The 2013/14 SOI states that capital grants are negotiated with the Council and that they are not yet approved for the three years of the SOI. As the Christchurch City Three Year Plan is in its consultation period, staff recommend that once approved that the Trust include these amounts in its SOI. 291
CORPORATE AND FINANCIAL COMMITTEE 8. 3. 2013
11. RESOLUTION TO EXCLUDE THE PUBLIC
Attached.
292
8. 3. 2013
CORPORATE AND FINANCIAL COMMITTEE
RESOLUTION TO EXCLUDE THE PUBLIC
Section 48, Local Government Official Information and Meetings Act 1987.
I move that the public be excluded from the following parts of the proceedings of this meeting, namely items 12. and 13.
The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter and the specific grounds under Section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:
ITEM GENERAL SUBJECT OF EACH REASON FOR PASSING GROUND(S) UNDER NO. MATTER TO BE CONSIDERED THIS RESOLUTION IN SECTION 48(1) FOR THE RELATION TO EACH PASSING OF THIS MATTER RESOLUTION
12. Assignment of Forestry Licence – ) GOOD REASON TO SECTION 48(1)(a) Bottle Lake and Chaneys Forest
13. Agreement for the Supply of ) WITHHOLD EXISTS security services to Council ) UNDER SECTION 7
This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by Section 6 or Section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public are as follows:
ITEM REASON UNDER SECTION PLAIN ENGLISH REASON WHEN REPORT CAN BE NO. ACT RELEASED
12. Protect the 7(2)(b)(ii) Matariki Forests have requested Following the public information likely to the transaction as strictly announcement by Matariki prejudice the confidential Forests commercial position
13. Official Information 9(2)(b)(ii) Commercially sensitive information Never Act (1982) during RFP process
Chairperson’s Recommendation: That the foregoing motion be adopted.
Note
Section 48(4) of the Local Government Official Information and Meetings Act 1987 provides as follows:
“(4) Every resolution to exclude the public shall be put at a time when the meeting is open to the public, and the text of that resolution (or copies thereof):
(a) Shall be available to any member of the public who is present; and (b) Shall form part of the minutes of the local authority.”