Appendix: Summary of the non-standard audit reports issued
Consulting matters: Observations on the 2021-31 consultation documents.
In summarising the non-standard audit reports, we have not repeated the wording of the emphasis of matter paragraph included in 67 audit reports relating to the uncertainty of the three waters reforms. This emphasis of matter paragraph is as follows:
Without modifying our opinion, we … [outline] the Government's intention to make three waters reform decisions during 2021. The effect that the reforms may have on three waters services provided is currently uncertain because no decisions have been made. The consultation document was prepared as if these services will continue to be provided by the Council, but future decisions may result in significant changes, which would affect the information on which the consultation document has been based.
Modified audit opinion – adverse opinion
| Palmerston North City Council |
| The underlying information and assumptions in the consultation document are not reasonable because they are inconsistent with the Council's financial strategy. The financial strategy caps the Council's debt at 200% of revenue. However, the forecasts in the consultation document show that the Council plans to exceed its debt cap after year four of the long-term plan (and is forecast to exceed the debt limits set by the New Zealand Local Government Funding Agency after year five). The Council notes that it is highly unlikely that lenders would be prepared to lend the amounts included in the underlying information. This means that the Council does not have a credible plan for funding all its activities and planned projects. Therefore, the Council needs to consider reducing levels of service, removing or deferring planned projects, and increasing rates further. None of these matters are addressed in the consultation document. Because of the unreasonable underlying information and assumptions and the inconsistencies with the Council's financial strategy, the consultation document cannot provide an effective basis for public consultation. |
Modified audit opinion – qualified opinion
| Ashburton District Council |
| Qualified opinion Assumption related to the funding of a second urban bridge between Ashburton and Tinwald The Council plans to spend $37 million to build a second urban bridge to connect Ashburton and Tinwald. The Council assumes that central government will fund $10.7 million of the project. We consider this assumption unreasonable because the Government has not made any funding available. If the funding is not received, the Council's current view is it will not go ahead with the project. The impact on the underlying information if the project does not go ahead would be a decrease in debt and rates of $7.5 million and $400,000, respectively. Emphasis of matter – Uncertainty over three waters reforms |
| Buller District Council Qualified opinion Westport port and the Kawatiri dredge The Council has assumed that $25.2 million in revenue will be received from a large commercial operator, throughout the 10 years of the plan. This revenue is needed for dredging the Westport harbour, which will be required for the operator to ship out of the port. We consider this assumption is unreasonable because there is no contract in place with the potential operator to secure this revenue. If the large commercial operation does not proceed, the Council will not receive this revenue and the Council has indicated that no additional costs will be incurred to dredge the Westport harbour. However, fixed operational costs will continue and these would need to be funded through other port revenues or by some other means. Karamea special purpose road The Karamea highway is currently 100% funded by Waka Kotahi NZ Transport Agency (Waka Kotahi) because of its special purpose road status. The Council has assumed that Waka Kotahi will continue to fund 100% of the Karamea highway for the 10 years of the plan. We consider this assumption is unreasonable because Waka Kotahi has advised that the status of the highway will change from a special purpose road to a local road, resulting in Waka Kotahi funding only 72% from the start of 2024/25. If 100% of funding is not received beyond 2023/24, the levels of service could reduce due to the Council not being able to afford the maintenance of the road. It could also have a major impact on rates. Punakaiki water supply scheme The Council plans to spend $6.7 million to upgrade and extend its Punakaiki water supply scheme during 2024/25 and 2025/26. In the information underlying the consultation document, the Council has assumed that the Government will fully fund the planned upgrade. We consider this assumption is unreasonable because the Government has not made any funding available. If the upgrade proceeds and the Government funding is not received, debt funding would be required, resulting in a large rates impact for each of the 93 households in Punakaiki. If the upgrade does not proceed, the levels of service will not improve. Emphasis of matter – Uncertainty over three waters reforms |
| Gore District Council Qualified opinion Lack of condition and age information for water supply and wastewater assets The Council does not have sufficient reliable information about the condition of the assets in those networks, many of which are nearing the end of their useful lives. Further, the exact age of assets that are more than 60 years old is not known due to a fire that destroyed the underlying infrastructure records in the 1950s. The Council has used historical failure rates of its assets to determine the investment required to upgrade these networks. We consider it unreasonable for the Council to use only historical failure rates to develop forecasts for upgrading its networks. Planning on this basis increases the risk of asset failures, which could result in reduced levels of service. Emphasis of matter – Uncertainty over three waters reforms |
| Hauraki District Council Qualified opinion Assumption related to the upgrade of wastewater treatment plants The Council plans to spend $41 million to upgrade its wastewater treatment plants within the next 10 years. In the information underlying the consultation document, the Council assumes that the Government will fund 50% of the upgrades. We consider this assumption unreasonable because the Government has not made any funding available. If this assumption was removed, the impact on the underlying information, over the next 10 years, would be an increase of debt to $86 million and an increase of targeted wastewater rates by another 39% to a total of $1,040 per household. Emphasis of matter – Uncertainty over three waters reforms |
| Horowhenua District Council Qualified opinion Assumption related to funding of Tara-Ika Infrastructure The Council has identified Tara-Ika (a 420-hectare block of land to the east of Levin) as a key growth area for the district. The Council assumes that, to accelerate the development of Tara-Ika, key public infrastructure will be delivered and funded externally and will not be funded by Council debt. We consider this assumption unreasonable because, to date, external funding has not been secured. If the Council is unsuccessful in securing external funding, the impact on the underlying information would be an increase in debt of $27 million and delaying $19 million of capital upgrades. Emphasis of matters Uncertainty over the delivery of the capital programme The Council has budgeted to deliver a capital programme of approximately $46 million per year over the 20-year plan. Although the Council has put a number of initiatives in place to deliver on its capital programme, there are risk factors, including resource availability, that could result in increased pressure on existing assets and delayed development of future growth areas. Infrastructure assets condition information The Council's decision about when to replace ageing assets is informed by continual assessment of asset condition and monitoring of reactive maintenance costs. The renewal of assets is, however, budgeted for based on the age of the assets. There is therefore a risk that unbudgeted expenditure might be required to pay for renewals that are needed earlier than planned, and this could result in an increased risk of disruption in services. Uncertainty over three waters reforms |
| Hurunui District Council Qualified opinion Improvements to the "Route 70 – Inland Road" and the consequences of those improvements have not been included in the underlying information Waka Kotahi NZ Transport Agency (Waka Kotahi) obtained the power to operate the "Route 70 – Inland Road" after the 2016 Kaikōura Earthquake. Waka Kotahi was responsible for maintaining, repairing, and upgrading the road until 24 December 2020, when this responsibility was formally transferred back to the Council for its share of the road. The Council has not recognised its share in the value of Waka Kotahi's improvements to the road because the Council did not have this information available when preparing the consultation document. As a result, the Council has not adjusted its forecast maintenance, renewals, and depreciation for the road in its underlying information. We are unable to determine the possible effect of these matters on the underlying information because it is impracticable to do so. Emphasis of matter – Uncertainty over three waters reforms |
| Kawerau District Council Qualified opinion Assumption related to external funding for renewals of the stormwater pipe network The Council plans to renew 15.4 kilometres of stormwater pipe network. In the information underlying the consultation document, the Council assumes that 75% of the costs to renew the stormwater pipe network over the next 10 years will be funded by Waka Kotahi NZ Transport Agency (Waka Kotahi). We consider this assumption unreasonable because although Waka Kotahi has previously funded 75% of the costs for stormwater asset maintenance, Waka Kotahi is not clearly responsible for funding 75% of the renewal of the Council's stormwater pipe network. If this assumption was removed, the impact on the underlying information would be a need to obtain other funding over the next 10 years, which might include an increase in debt. Emphasis of matters Uncertainty over the three waters renewals forecasts The Council's forecasting for three waters asset renewals is based on the assets' minimum lifespan. We note that using age-based information, rather than condition information, increases the risk that assets requiring renewal are not replaced at the best time. The Council plans to carry out an asset evaluation programme and to use this information to determine the actual renewals required. Uncertainty over three waters reforms |
| Waitaki District Council Qualified opinion Inadequate explanation of the matters of public interest relating to the proposed content of the infrastructure strategy Section 93C(2)(c)(ii) of the Act requires the Council to describe in its consultation document matters of public interest relating to the proposed content of the infrastructure strategy. The disclosures about the Council's infrastructure strategy do not adequately describe the content of the strategy and asset management plans. In particular, the Council does not explain its approach to maintaining and renewing its three waters assets. Consequently, the infrastructure strategy disclosures in the consultation document do not provide an effective basis for public participation in the Council's decisions about the proposed content of its 2021-31 long-term plan. Emphasis of matters Uncertainty over external funding of capital projects The Council has assumed that a significant percentage of the funding to build an indoor sports and events centre will be obtained externally. The external funding contributions are currently uncertain because funding agreements are not in place. There is a risk that the level of funding through rates could be impacted, but the Council indicates that a decision to build the facility will not be made until there is certainty of what can be delivered within funding constraints. Uncertainty over three waters infrastructure assets forecast The Council's forecasting for three waters infrastructure asset renewals is based on age and asset failure rates. Planning on this basis increases the risk of disruption in services. Uncertainty over three waters reforms |
| Wellington City Council Qualified opinion Infrastructure asset condition information The Council has challenges with its ageing three waters networks. Many of the assets in the networks are old, and a significant percentage have already passed the end of their expected useful life. The Council has also experienced several high-profile pipe failures that have affected levels of service. The Council does not use information about the condition of its three waters assets to cost and direct its investment in its three waters networks. Rather, the renewal of assets has been forecast based on the age of the assets, capped by what the Council considers is affordable. Given the age of the three waters networks and recent asset failures, we consider it is unreasonable for the Council to use age alone as the basis to support and direct the renewal of its three waters infrastructure. This could result in more asset failures during the 10-year period of the long-term plan, reduced levels of service, and greater costs than forecast. Assumption related to the funding of City Housing The Council has an obligation to provide social housing and therefore needs to plan to periodically upgrade its housing portfolio. This obligation comes from the Deed of Grant with Central Government effective from 2007. The Council outlines that it has calculated the expected cost for a full capital upgrade and maintenance of its social housing to be $446 million over the 10-year period of the long-term plan. The Council also notes that it is working on options for how this will be funded. However, only $42.8 million has been included in the Council's budget. The Council has not included the remaining estimated costs of $403.2 million, or information about how this will be funded, in the information and assumptions underlying its consultation document. Given the Council's obligation under the Deed of Grant, it is unreasonable to omit these costs and associated funding for social housing from its underlying information. In our view, the underlying information should include the remaining estimated costs of $403.2 million and the Council should address how these costs will be funded. Emphasis of matters Uncertainty over the delivery of the three waters capital programme The Council has budgeted to deliver a three waters capital programme of approximately $678 million over the period of the 10-year plan. The Council, through its service provider (Wellington Water Limited), has put a number of initiatives in place to deliver on its capital programme. However, there is a risk about the delivery of all the work planned due to other large infrastructure projects within the region and nationally, which are competing for limited resources. This, coupled with the uncertainty of Covid-19, could result in the Council failing to deliver its capital programme in future years, which could affect service levels. Uncertainty over funding of wastewater treatment The Council outlines its plan and preferred option for the investment in the wastewater treatment plant at Moa Point. The Council has assumed that external funding contributions will be obtained through use of the Infrastructure Funding and Financing Act 2020 to invest in the existing wastewater treatment plant site. The external funding contributions are currently uncertain because funding agreements are not yet in place. If the level of external funding is not achieved there could be an increase in debt of $147 million to $208 million and a corresponding increase in capital expenditure, dependent on the outcome of the options provided and consulted on by the Council. This could also result in delays with the implementation of other planned improvements to levels of service. Uncertainty over three waters reforms |
| West Coast Regional Council Qualified opinion Insufficient evidence to support the capital spending assumption The Council plans to spend $30.9 million during the first two years of the plan on its flood and erosion protection assets. In the underlying information, the Council has assumed that it will have the required resources, contracted services, and resource consents in place to complete the projects on time. We were unable to obtain appropriate evidence to support these assumptions. As a result, we were unable to determine if any adjustments should have been made to the underlying information, including the funding for these projects. Incorrect accounting for forecast costs of aerial photography The Council will be carrying out an aerial surveying project during the first three years of the plan. The Council is planning to account for the estimated costs of the project of $2.6 million as capital expenditure, resulting in an intangible asset. In our view, the costs should be accounted for as operating expenditure, as the aerial mapping data is not controlled by the Council as it will be freely available to the public. The forecast costs will therefore not meet the criteria to be recognised as an intangible asset. As a result, the underlying information is misstated as it spreads the forecast costs of the aerial photography over 10 years after completion of the project, and not when the costs are expected to be incurred. Emphasis of matters Breach of statutory deadline The Council failed to adopt the consultation document in time for the plan to be adopted before the start of the first year to which it relates. The late adoption of the plan will breach section 93(3) of the Local Government Act 2002. The Council has outlined that there will be potential implications on the delivery of projects and the timing of the assessments of Council's rates and invoices for annual charges. Extent of damage from the significant flooding event during July 2021 is unknown A significant flooding event occurred during July 2021 in the West Coast region. The Council has not made amendments to the forecasts contained in the underlying information. This is because the extent of the damage to the Council's flood protection infrastructure assets are currently unknown and have yet to be assessed by the Council. |
Unmodified audit opinions with "emphasis of matter" paragraphs
|
Auckland Council
Changes in these assumptions could require the Council to reduce its planned capital expenditure and may result in a reduction in levels of service, without further increases in funding, either through rates or debt. |
| Chatham Islands Council Uncertainty over the ability to renew infrastructure The Council relies on grants from various Government agencies to fund its capital expenditure on asset renewals, and therefore projects are delayed until the funds are confirmed. Because government agency funding has not been secured, the Council has not included a renewals programme with associated funding in its financial forecast. It is expected that asset renewals will need to be made during the next 10 years. There is a risk that critical assets might fail, which could result in a need for the Council to divert funds from other activities, or to borrow funds in the short term. Uncertainty over three waters reforms |
| Clutha District Council Uncertainty over the delivery of the capital programme The Council is proposing a significant increase in infrastructure investment, particularly in the area of three waters. Although the Council has taken steps to support the delivery of the infrastructure programme, there is a risk that the Council might not be able to meet the planned time frames – for example, due to challenges in obtaining contractors. This could result in outages and failures occurring more regularly, affecting levels of service. The Council's approach to mitigate this risk is to be flexible and adaptive to changes while ensuring that compulsory work is done, especially towards improving wastewater discharges and ensuring that there is safer drinking water. Uncertainty over three waters reforms |
| Far North District Council Water supply and wastewater asset condition and performance information Although the Council continues to update its asset information, carry out condition assessments, and monitor asset performance, the asset data used to support its infrastructure replacement and renewal programme is not sufficiently complete. There is therefore a risk that the Council has not correctly identified some of its critical water supply and wastewater assets that might need replacing during the period of the long-term plan. The Council has set out how it has reduced this risk and how it proposes to spend more in the future on understanding the state of its assets. Uncertainty over three waters reforms |
| Greater Wellington Regional Council Uncertainty over the electrification of the bus and rail networks The Regional Council plans to electrify its bus and rail networks. In the information underlying the consultation document, the Regional Council assumes that the Government will provide a significant level of funding. If the Regional Council does not receive the assumed government funding, its rail programme affordability will be at risk and it will need to significantly revise its plans. Uncertainty over the delivery of the capital programme The Regional Council is proposing a significant increase in its capital expenditure programme compared to its previous long-term plan. While the Regional Council has taken steps to manage its risk to delivering the programme, there is a level of uncertainty around the timing of delivery of the programme, due to constraints like contractor and material availability. If the Regional Council is not able to deliver the capital programme, it has the potential to affect the level of service provided, the ability to meet the demands of a growing region, and the ability of the Regional Council to reduce its carbon footprint. Uncertainty over three waters reforms |
| Hamilton City Council Cost savings The Council expects to achieve a cost saving of $106 million over the next 10 years. If these savings are not realised, the Council might need to rely on debt to achieve its planned expenditure. To remain within its debt-to-revenue limits, the Council might also need to increase rates. Infrastructure asset condition information Although the Council continues to update its asset information, the asset data used to support its planned infrastructure assets renewal programme is not complete. There is therefore a risk that some assets, that might need replacing, have not been identified. The Council sets out how it reduces this risk and also proposes to spend more on understanding its assets in its long-term plan. Uncertainty over three waters reforms |
| Hawke's Bay Regional Council Uncertainty over the delivery of the capital programme We draw attention to a disclosure that outlines that the Council is proposing total capital expenditure of $153 million over the next 10 years. Although the Council has taken steps to mitigate the risk of not delivering aspects of the proposed capital expenditure, there is an inherent risk that the Council will not be able to deliver on the programme, particularly when it has increased substantially from previous years. The Council notes that there is pressure on the contracting market, which might result in challenges for the Council in procuring services on time and to budget. If a project is not able to proceed as planned, the Council will prioritise its renewal work and critically review the programme to enable deferral. |
| Hutt City Council Uncertainty over the three waters forecasts The Council's forecasting for its three waters assets is based on age. Using only aged-based information increases the level of uncertainty in the timing and amounts of these forecasts. The Council's forecasts include investments in understanding the condition of its underground assets, which will reduce this uncertainty. Uncertainty over the delivery of the capital programme The Council is proposing a significant increase in its capital programme by doubling its spend compared to the previous long-term plan. Although the Council has put a number of initiatives in place, there is an inherent level of uncertainty and risk that the Council might not be able to delivery on the programme, especially when it has increased substantially. The Council notes the potential impacts of not achieving the capital programme, such as not meeting planned levels of service, or greater costs in the long term. Uncertainty over three waters reforms |
| Invercargill City Council Uncertainty over external funding of capital projects The Council's assumption is that external funding contributions will be obtained to build an urban play space, re-open and refurbish the Southland Museum and Art Gallery, and improve Rugby Park over the next 10 years. The external funding contributions are currently uncertain because funding agreements are not in place. If the level of external funding is not achieved and where significant ratepayer funding is required, the Council will consult with the community on contributing more ratepayer funding or whether to explore other options. Uncertainty over the delivery of the capital programme The Council is proposing an ambitious capital works programme. While the Council is taking steps to deliver its planned capital programme, there is uncertainty over the delivery of the programme due to the significant constraints in the construction market and the dependence on external funding for the larger projects, as highlighted in the above paragraph. If the Council is unable to deliver on a planned project, it could result in a decline in levels of service along with possible asset failures. Uncertainty over three waters reforms |
| Kāpiti Coast District Council Uncertainty over the delivery of the capital works programme The Council is proposing an ambitious capital expenditure work programme. Although the Council has put a number of initiatives in place to deliver its work programme, it recognises the challenging environment it is operating in, with pressures on the availability of materials and specialist contractors. If a project is affected by this, it could have implications for costs and associated funding, and for levels of service. Uncertainty over three waters reforms |
| Mackenzie District Council Breach of statutory deadline The Council failed to adopt the consultation document in time for the plan to be adopted before the start of the first year to which it relates. This is a breach of section 93(3) of the Local Government Act 2002. The Council notes that there could be potential implications on the delivery of projects and the timing of the assessments of Council's rates and invoices for annual charges. Uncertainty over the delivery of the capital programme The Council outlines the key capital projects that the Council proposes to deliver over the next 10 years. Although the Council is taking steps to deliver its planned capital programme, there is uncertainty over the delivery of the programme, due to resource availability. If the Council is unable to deliver on a planned project, it could affect levels of service. Canterbury flooding event The Council outlines the extent of damage to the Council's roading network that was caused by the significant flooding event in the Canterbury region during May 2021. The Council has assessed that it can complete the flood remediation work within existing budgets. This is because existing forecasts include allowances for weather-related events, and existing works are able to be reprioritised to address flooding damage. This approach increases the risk that assets requiring renewals or maintenance might be deferred, which could affect service levels. Uncertainty over three waters renewals forecasts The Council's forecasting for its three waters assets is based on age. Using only age-based information increases the risk that assets requiring renewal are not identified early and prioritised accordingly. Additionally, the Council has elected to defer a portion of renewals that are required from its age-based information for the replacement of Twizel wastewater reticulation. Uncertainty over three waters reform |
| Napier City Council Uncertainty over the delivery of the capital programme The Council is proposing a $825 million capital programme over the next 10 years, which is a 52% increase compared to the last 10-year plan. While the Council has taken steps to support the delivery of the capital programme, there is an inherent level of uncertainty and risk that the Council might not be able to deliver on its capital programme. If the Council is not able to deliver all of its capital programme, the Council will reorganise the capital programme to ensure that basic needs are met and will not progress with some projects to increase levels of service. Uncertainty over three waters reforms |
| Ōpōtiki District Council Uncertainty over the delivery of the capital programme The Council is proposing a large capital programme, which includes spending close to $50 million in the first three years of the long-term plan. Although the Council has taken steps to mitigate the risk to delivering its capital programme, there is a level of uncertainty around the timing of delivery of the capital programme due to the availability of consultants and contractors. If the capital programme is affected by this, it could result in the planned work being moved to a later date, a loss of government funding for some projects, or a decline in levels of service, such as possible asset failures that disrupt customers. Uncertainty over three waters reforms |
| Porirua City Council Uncertainty over the three waters forecasts The Council's forecasting for its three waters assets is based on age. Using only age-based information means there is an increased degree of uncertainty on the level of spending necessary and on which assets. Wellington Water Limited will work on better understanding asset condition, which will improve the reliability of future investment needs. Uncertainty over the delivery of the capital programme The Council is proposing to significantly increase its investment in three waters and transport infrastructure over the next 30 years. While the Council has put a number of initiatives in place, there is uncertainty over Council's ability to deliver infrastructure projects within the agreed time frames. The increased demand for skilled construction workers and materials could create delivery difficulties. If changes are required, the Council will prioritise the upgrading of critical infrastructure to maintain levels of service and avoid network failure. Uncertainty over three waters reforms |
| Queenstown-Lakes District Council Uncertainty related to the proposed 2024 visitor levy The proposed introduction of a visitor levy from 2024 to fund visitor-related infrastructure, and the preparation of the necessary legislation, was put on hold due to Covid-19 and uncertainty about when international tourism will return. If the visitor levy is not available from 2024, the related capital programme will be significantly affected or rates will increase. Assumption regarding completion of planned capital works programme The Council is proposing an ambitious capital expenditure work programme. Although the Council has put a number of initiatives in place to deliver its work programme, it recognises the challenging environment it is operating in, with pressures on the availability of materials and specialist contractors. The Council also intends to review and re-prioritise other work if it is not able to deliver projects to the proposed time frames. Uncertainty over three waters reforms |
| Rangitīkei District CouncilUncertainty over three waters forecasts The Council's forecasting for its three waters assets is based on age. Using only age-based information for the next three years, until the Council's asset management strategy work is completed, creates uncertainty over the reliability of future investment needs and decisions. The Council's forecasts include investment in understanding the condition of its underground assets, which will reduce this uncertainty. Uncertainty over the delivery of the capital works programme The Council plans capital expenditure of $227 million over the next 10 years. Although the Council has taken steps to complete its capital works programme, there remains an inherent risk that the Council will not be able to deliver the programme, which includes an increased demand for skilled construction workers and materials. If the Council is not able to deliver its capital programme, these delays could potentially result in increased costs or asset failure, risking the continuity and delivery of services. Cost savings The Council is pursuing operational efficiencies and has assumed a total cost saving of $8 million by reducing the operational budget over the next 10 years. To the extent that the Council does not achieve the planned savings there could be an impact on future debt levels, service levels, and/or rate rises. Uncertainty over three waters reforms |
| Rotorua Lakes Council Uncertainty over external funding of capital projects The Council makes an assumption that external funding contributions will be obtained for redeveloping the Aquatic Centre, refurbishing the Museum, and upgrading the Westbrook Sports Precinct. The Council requires $37.5 million in external funding for these projects, which is currently uncertain because funding has not yet been sought. If the level of external funding is not achieved, the Council will consider whether to scale back on the projects, delay them, or increase its funding commitments. Uncertainty over three waters reforms |
| Ruapehu District Council Uncertainty over the delivery of the capital programme There is a significant increase (64.1%) in the Council's 2021/22 budgeted capital expenditure. Although the Council has put a number of initiatives in place to deliver its planned capital programme, there are unknown uncertainties beyond its control, such as demand and pressures on the contractor market, availability of raw materials, and the potential impact of Covid-19 on the supply chain. If a project is affected, levels of service would not improve as planned and there could be some risk of asset failures. Uncertainty over three waters reforms |
| South Taranaki District Council Uncertainty over the delivery of the capital works programme The Council outlined its proposed capital work programme. Although the Council has put a number of initiatives in place to deliver its work programme, it recognises that completing all the planned capital work is a big challenge. If the Council is not able to deliver an aspect of the planned work, the Council will re-prioritise its programme to continue to meet existing levels of service. Uncertainty over three waters reforms |
| South Wairarapa District Council Uncertainty over Featherston wastewater treatment plant The Council is currently operating the Featherston wastewater treatment plant under an extended resource consent while it is working to identify the best long-term solution. The Council has allocated $16 million in the first five years of the long-term plan to provide treatment improvements to the pipe network and current treatment plant, and to progress and submit a new consent, and included nothing in its forecasts beyond the first five years. A long-term solution will cost significantly more than the $16 million allocated in the long-term plan. The Council plans to consult further with the community once it knows the costs of the long-term solution as this might have a significant impact on the Council's proposed budgets and levels of service. Uncertainty over the three waters forecasts The Council's forecasting for its three waters assets is based on age. Because it is not based on condition information, there is a higher degree of uncertainty about how the Council has prioritised its investment needs. Wellington Water Limited is commencing a programme of work to fully understand the condition of all assets, which will increase certainty of future investment needs. Uncertainty over the delivery of the capital programme The Council is proposing an ambitious capital programme compared to its previous long-term plan. Although the Council has taken steps to mitigate its risk, there is an inherent level of risk that the Council will not be able to deliver on the programme, particularly due to the substantial increase in the programme. The potential impacts of not achieving the capital programme are not meeting planned levels of service, or increased costs in the long term. Uncertainty over three waters reforms |
| Tasman District Council Uncertainty over the Waimea Community Dam construction costs The Council outlines the revised cost estimate range to complete the Waimea Community Dam. The Council has estimated it would cost $158.4 million to complete the dam and this cost has been included in the Council's 10-year plan. There are key project risks with the cost estimate, including Covid-19 related delays and the scale of work required on unexposed geological features. As the dam is approximately 50% complete and most of the remaining work is above ground level, the likelihood of geological risks are reduced. The Council intends to fund an additional $25.2 million of the cost to complete the dam, and describes the impact that this could have on debt and rates through different funding options. Uncertainty over three waters reforms |
| Taupō District Council Uncertainty over the delivery of the capital programme There is a significant increase (59%) in the Council's capital expenditure compared to their 2020/21 budget. Although the Council has invested in programmes and training to improve the deliverability of its capital programme, there is a high level of uncertainty that the consultant and contractor market will be able to deliver on the planned project timelines. If a project is affected by this, it could result in a decline in levels of service along with possible asset failures. Uncertainty over three waters reforms |
| Tauranga City Council Uncertainty over the delivery of the capital programme The Council is proposing a capital programme that exceeds $4.57 billion over the 10 years of the long-term plan. While the Council has taken steps to deliver its planned capital programme, there is a high risk that projects could be delayed if suppliers cannot be sourced. To mitigate the impact that this might have on levels of service, the Council plans to prioritise renewals projects. Uncertainty over three waters reforms |
| Upper Hutt District Council Uncertainty over the three waters forecasts The Council's forecasting for three waters assets is based on age. Using only aged-based information means that there is a higher degree of uncertainty on how the Council has prioritised its investment needs. Wellington Water Limited will work on better understanding asset condition, which will improve the reliability of future investment needs. Uncertainty over the delivery of the capital programme The Council is proposing an ambitious capital programme compared to the previous long-term plan. Although the Council has put a number of initiatives in place, there is an inherent level of risk that the Council will not be able to deliver on the programme, especially when it has increased substantially. The Council notes, for example, that capacity in the contractor market could create delivery difficulties, and it will prioritise upgrading critical infrastructure and maintaining levels of service. Uncertainty over three waters reforms |
| Waikato District Council Uncertainty over the delivery of the capital programme The Council is proposing a significant increase in its budgeted capital programme, with capital expenditure forecast to increase by 102% for 2021/22 compared to 2020/21. Capital expenditure is forecast to be maintained at that increased level for the duration of the long-term plan. Although the Council has put a number of initiatives in place to deliver its planned capital programme, there are many factors beyond its control, such as the state of the national economy, the impact of Covid-19, and the capacity of the market to deliver what is needed. If a project is affected by these factors, levels of service might not improve as quickly as planned and there could be increased risk of asset failures. Uncertainty over three waters reforms |
| Waikato Regional Council Uncertainty over continued funding of Te Huia The Council is launching a start-up passenger rail service (Te Huia) in April 2021. The Council assumes that the Government will continue its funding after the five-year service start-up period, over the life of the long-term plan. The Council also assumes that additional funding from Government will be provided to support the proposed extension of the service's operation in 2023/24. If the start-up funding is not continued or the additional funding for the extended services is not received, the Council would need to seek alternative funding which may result in changes being made to the rail service, including not proceeding with the proposed service improvements. |
| Westland District Council Uncertainty over the delivery of the capital programme The Council is proposing a capital programme of $109 million over the next 10 years, with significant planned spending during the first two years. Although the Council has taken steps to deliver its planned capital programme, there is uncertainty over the delivery of the programme due to the availability of contractors and external funding. If the Council is unable to deliver on a planned project, it could affect intended levels of service. Uncertainty over the three waters renewals forecasts The Council's forecasting for three waters assets is largely based on age. Using age-based information, rather than condition information, increases the risk that assets requiring renewal are not identified early and prioritised accordingly. The Council started a programme to understand the condition of its most critical assets, which will reduce this risk. The Council also plans to prioritise renewals of critical assets. Uncertainty over three waters reforms |
| Whakatāne District Council Uncertainty over external funding The Council requires $13.7 million in external funding for a new wastewater treatment plant in Matatā. The Council has assumed that $6.7 million and $7 million will be funded by the Ministry of Health and the Bay of Plenty Regional Council, respectively. The external funding contributions are currently uncertain because they have not yet been confirmed. If the Council is not able to obtain this level of funding, it will reconsider how to proceed with the project. Uncertainty over three waters reforms |
| Whanganui District Council Uncertainty over external funding of capital projects The Council makes the assumption that external funding contributions will be obtained for upgrading the velodrome and extending the Davis library. The external funding contributions are currently uncertain because funding has not yet been sought. If the level of external funding is not achieved, the Council will reconsider proceeding with these projects. Uncertainty over three waters reforms |
Further, the following councils received an unmodified audit opinion with "emphasis of matter" paragraph in respect of the uncertainty over the three waters reforms only.
| Carterton District Council | Ōtorohanga District Council |
| Central Hawke's Bay District Council | Selwyn District Council |
| Central Otago District Council | South Waikato District Council |
| Christchurch City Council | Southland District Council |
| Dunedin City Council | Stratford District Council |
| Gisborne District Council | Tararua District Council |
| Grey District Council | Thames-Coromandel District Council |
| Hastings District Council | Timaru District Council |
| Kaikōura District Council | Waimakariri District Council |
| Kaipara District Council | Waimate District Council |
| Manawatū District Council | Waipā District Council |
| Marlborough District Council | Wairoa District Council |
| Masterton District Council | Waitomo District Council |
| Matamata-Piako District Council | Western Bay of Plenty District Council |
| Nelson City Council | Whangārei District Council |
| New Plymouth District Council |