Agenda of Extraordinary Council Meeting - Wednesday, 14 February 2024

Extraordinary Council Meeting item: 5.1

14 February 2024

TITLE:	Governance structure review and actions
From:	Gavin Dawson, Governance Specialist
Authorised by Group Manager/s:	Jonathan Gibbard, Tāhūhū Rangapū - Chief Executive Officer, on 08 February 2024

Executive summary/Whakarāpopototanga

This report implements the notice of motion and council decision during the November 2023 council meeting to disestablish the existing Audit and Risk Committee and Property and Investment Committee, along with the membership (Attachment 1).

In accordance with the council decision and subsequent council workshop, this report proposes that an Audit, Risk, and Finance Committee and Infrastructure Committee be established, and membership appointed using powers provided for in the Local Government Act 2002.

Recommendation(s)

1. That the report ‘Governance structure review and actions ’ by Gavin Dawson, Governance Specialist and dated 31 January 2024, be received.

2. That the Audit and Risk Committee and its membership be disestablished.

3. That the Property and Investment Committee and its membership be disestablished.

4. That the Audit, Risk, and Finance Committee be established.

5. That the Audit, Risk, and Finance Committee terms of reference be adopted (Attachment 3).

6. That the following elected members are appointed to the Audit, Risk, and Finance Committee:

§ Cr Peter Lucas (Chair of Committee)

§ Cr John Blackwell (Committee Member)

§ Cr Joe Carr (Committee Member)

§ Cr Jack Craw (Committee Member)

§ Chair Geoff Crawford (ex-officio Member).

7. That the Infrastructure Committee be established.

8. That the Infrastructure Committee terms of reference be adopted (Attachment 2).

9. That the following elected members are appointed to the Infrastructure Committee:

§ Cr Joe Carr (Chair of Committee)

§ Cr John Blackwell (Committee Member)

§ Cr Geoff Crawford (Committee Member).

Options

No.	Option	Advantages	Disadvantages
1	That the recommendations are accepted in their entirety.	The Notices of Motion are given effect as intended.	There are no known disadvantages.
2	That the recommendations are not accepted in their entirety.	The current system and processes remain in place with no change required.	The Notices of Motion are not given effect as intended.
3	That the recommendations are accepted in part.	There are no known advantages.	The Notices of Motion are not given effect as intended.

The recommended option is option 1, as this gives effect to the November 2023 notice of motion and implements a new governance structure, as confirmed during a workshop held on 30 January 2024.

Considerations

1. Climate Impact

There are no climate impacts related to this matter.

2. Environmental Impact

There are no environmental impacts related to this matter.

3. Community views

Community consultation is not required for this matter.

4. Māori impact statement

Council has supported greater involvement of Maori in council governance structure and decision-making processes. This report maintains this approach with the two independent Māori advisors appointed to the two committees proposed to be disestablished being included as full members of both new committee's of council.

5. Financial implications

There are no increased costs due to the proposed changes.

6. Implementation issues

Implementation of the committees will follow immediately after a decision is made.

7. Significance and engagement

This matter is deemed of low significance when assessed against council policy.

8. Policy, risk management and legislative compliance

This matter is compliant with policy and legislative requirements.

Background/Tuhinga

The Council voted to make governance leadership and structure changes at the November 2023 Council meeting (Attachment 1).

Draft terms of reference for a new Infrastructure Committee and Audit, Risk, and Finance Committee were presented for feedback from elected members on Tuesday 30 January 2024. The feedback provided at that workshop has been incorporated into the proposed terms of reference for consideration and adoption.

Council’s power to act

The power of the council to establish, amend, or disestablish governance structures is provided for in the Local Government Act 2002. For the council to use this power, a simple majority of council is required at a formal meeting of the council.

About the new committees

It is proposed that two new committees are established.

Infrastructure Committee

The proposed terms of reference are provided in Attachment 2.

These were developed through a combination of reviewing NRC responsibilities and statutory obligations, regional governance arrangements, and models used by other councils around New Zealand.

Initially, climate change was included in the terms of reference which was reviewed at the council workshop. This has now been removed as the infrastructure components of climate change are well covered by other specific references.

The following guiding principles were applied in the development of the draft terms of reference:

§ Ensuring that the committee provides an opportunity to strengthen and improve the current system as a whole

§ Ensuring that the work, role, functions, and programmes of existing governance bodies are not duplicated

§ Ensuring that the Committee has an opportunity to offer meaningful and timely feedback

§ Create opportunities to advocate and highlight opportunities and challenges faced by the Northland region

§ Looking to other councils on what they do

§ Governance best practice.

Audit, Risk, and Finance Committee

The proposed terms of reference are provided in Attachment 3.

It is proposed that the existing Audit and Risk Committee and Property and Investment Committee be disestablished, and an Audit, Risk, and Finance Committee be established, in line with other public sector organisations and best practice.

It is important to note that the terms of reference for the proposed Audit, Risk, and Finance Committee are based on the existing terms of reference used for the current Audit and Risk Committee and Property and Investment Committee.

One additional general delegation has been added, based on feedback from the workshop held on 30 January 2024. It relates to the delegation’s manual and reads, “Review the delegation’s manual from time to time and make recommendations to council for any changes”.

Attachments/Ngā tapirihanga

Attachment 1: Council Meeting Minute extract - 28 November 2023 ⇩

Attachment 2: Proposed Infrastructure Committee terms of reference ⇩

Attachment 3: Proposed Audit, Risk, Finance Committee terms of reference ⇩

Extraordinary Council Meeting item: 5.2

14 February 2024

TITLE:	Review of Councillor Portfolios
From:	Chris Taylor, Governance Specialist
Authorised by Group Manager/s:	Auriole Ruka, Pou Manawhakahaere - GM Governance and Engagement, on 08 February 2024

Executive summary/Whakarāpopototanga

This report enables council to review its councillor portfolios taking into account the changes that have occurred to its governance arrangements since the portfolio holders were originally appointed in November 2022.

It is important for the efficient and effective running of business that councillor portfolios are assigned to the appropriate role and/or subject expert.

Recommendations:

1. That the report ‘Review of Councillor Portfolios’ by Chris Taylor, Governance Specialist and dated 31 January 2024, be received.

2. That council confirms the following councillor portfolios:

Memberships / Delegation	Councillor
Kaipara Moana Working Party	Cr T Shortland and Cr P Jones
Northland Conservation Board	Cr G Crawford
Shareholder representative for Northland Marsden Maritime Holdings Ltd (delegating all necessary authority to represent the council’s interest including but not limited to exercising council’s vote at Annual General Meetings and giving effect to council’s shareholder resolutions).	Chair of council
Shareholder representative for Northland Inc Ltd (Delegating all necessary authority to represent the council’s interest including but not limited to exercising the council’s vote at Annual General Meetings and giving effect to council’s shareholder resolutions)	Chair of council
Shareholder representative on Regional Software Holdings Ltd. (Delegating all necessary authority to represent the council’s interest including but not limited to exercising the council’s vote at Annual General Meetings and giving effect to council’s shareholder resolutions)	Chair of council
Upper North Island Strategic Alliance (UNISA)	Chair of council
Zone one (LGNZ)	Chair of council

3. That council notes that councillor portfolios for Appeals on the Regional Plan and for the Northland Sports Facilities Plan are no longer required.

Options

No.	Option	Advantages	Disadvantages
1	Update the portfolio holders.	Ensures the councillor portfolios are assigned to the appropriate elected members based on role and/or subject expert.	None-apparent.
2	Do not update the portfolio holders.	None-apparent.	The portfolio holders do not reflect the changes that have occurred to the council’s governance arrangements since the original appointments were made.

The staff’s recommended option is 1; update the portfolio holders.

Considerations

Being an administrative matter, climate impact, environmental impact, community views, Māori impact statement, financial implications and implementation issues are not directly relevant.

1. Significance and engagement

In relation to section 79 of the Local Government Act 2002, this decision is considered to be of low significance when assessed against council’s Significance and Engagement Policy given it is an administrative matter and part of council's day to day activities.

2. Policy, risk management and legislative compliance

The recommendations within this report give effect to Schedule 7, Clause 32 of the Local Government Act 2002 (LGA) which states that for the purposes of efficiency and effectiveness in the conduct of the local authority’s business, a local authority may delegate to a committee or other subordinate decision-making body, community board, or member or officer of the local authority certain responsibilities (noting the Act clearly defines those responsibilities which cannot be delegated).

Background/Tuhinga

Following the 2022 local government elections, the new council confirmed its governance structure at the 22 November 2022 council meeting. This included confirmation of the various committees, subcommittees and working parties, their memberships and Terms of Reference. Council also confirmed its councillor portfolios as follows:

Memberships / Delegation	Councillor
Appeals on Regional Plan	Cr A Macdonald
Kaipara Moana Working Party	Cr T Shortland and Cr P Jones
Northland Conservation Board	Cr G Crawford
Northland Sports Facilities Plan (Sport Northland)	TBA at such time Sport Northland has confirmed its governance arrangements.
Shareholder representative for Northland Marsden Maritime Holdings Ltd (delegating all necessary authority to represent the council’s interest including but not limited to exercising council’s vote at Annual General Meetings and giving effect to council’s shareholder resolutions).	Cr T Shortland
Shareholder representative for Northland Inc Ltd (Delegating all necessary authority to represent the council’s interest including but not limited to exercising the council’s vote at Annual General Meetings and giving effect to council’s shareholder resolutions)	Cr P Jones
Shareholder representative on Regional Software Holdings Ltd. (Delegating all necessary authority to represent the council’s interest including but not limited to exercising the council’s vote at Annual General Meetings and giving effect to council’s shareholder resolutions)	Cr T Shortland
Upper North Island Strategic Alliance (UNISA)	Cr T Shortland
Zone one (LGNZ)	Cr T Shortland

Since the original appointments were made there have been significant changes to governance arrangements including:

· All appeals on the Proposed Regional Plan have now been resolved and all consent orders issued by the Court. Therefore this portfolio is no longer required.

· Sport Northland has confirmed its new governance structure and NRC no longer requires a portfolio holder for the Northland Sports Facilities Plan.

· Councillor Shortland replaced Councillor Jones as one of NRC’s two members on the Joint Regional Economic Development Committee (in conjunction with Councillor Robinson). This was confirmed at the 28 February 2023 council meeting. Therefore it is timely for council to consider who is the appropriate Shareholder representative for Northland Inc. Limited.

· The council voted to make governance leadership and structure changes at the

28 November 2023 council meeting. One of the proposed changes was the merging of the Audit and Risk Subcommittee and the Investment and Property Subcommittee (addressed in the previous item). Another significant change was that Councillor Crawford was appointed the new Chair of the Regional Council following the resignation of Councillor Shortland from this role.

It is noted that the following portfolios were originally assigned in name to Councillor Shortland to reflect the role of Chair of council and therefore need to be reassigned to the new Chair:

− Shareholder representative for Northland Marsden Maritime Holdings Ltd;

− Shareholder representative on Regional Software Holdings Ltd;

− Upper North Island Strategic Alliance (UNISA); and

− Zone one (LGNZ).

This matter is now set down for formal consideration.

Attachments/Ngā tapirihanga

Nil

Extraordinary Council Meeting item: 5.3

14 February 2024

TITLE:	Review of Elected Members' Remuneration
From:	Chris Taylor, Governance Specialist
Authorised by Group Manager:	Auriole Ruka, Pou Manawhakahaere - GM Governance and Engagement, on 08 February 2024

Executive summary/Whakarāpopototanga

This report gives effect to the Notice of Motion that was passed at the 28 November 2023 council meeting stating:

‘That the current NRC councillor remuneration package is reviewed, with a view to council agreeing on an improved remuneration structure and package at the next council meeting.’

Formal approval of the revised remuneration arrangements is sought by council prior to a proposal being submitted to the Remuneration Authority for consideration and, on approval, will be included in their next Determination. It is important to note that the revised proposal must be lodged with the Remuneration Authority prior to 23 February 2024 for it to be included in the next Determination due to be issued late March 2024 (hence the basis for calling an extraordinary council meeting to consider this and the previous matters which are all interdependent).

If council misses this deadline, then the next available opportunity will be when the Remuneration Authority issues its next Determination late June 2024.

Recommendations:

1. That the report ‘Review of Elected Members' Remuneration’ by Chris Taylor, Governance Specialist and dated 5 February 2024, be received.

2. That based on the allocation of responsibilities and methodology outlined in the body of this report, council approves and recommends the following distribution of the governance remuneration pool to the Remuneration Authority as follows:

Office	Positions	Remuneration ($)	Total ($)
Deputy Chairperson	1	80,619	80,619
Chairperson of the Regional Transport Committee and Chairperson of the Infrastructure Committee	1	73,619	73,619
Chairperson of the Audit Risk and Finance Committee	1	71,819	71,819
Chairperson of the Whangarei Public Transport Working Party	1	72,419	72,419
Councillor with no additional responsibilities	4	70,618.5	282,475
Total	8		580,951

3. That the higher duties allocation set out above and the necessary supporting information be provided to the Remuneration Authority prior to 23 February 2024.

Options

No.

Option

Advantages

Disadvantages

Approve the revised remuneration arrangements based on Methodology One.

· The remuneration arrangements more accurately reflect the revised governance arrangements and additional positions of responsibility.

· Methodology One is consistent with council’s current approach whereby a $10k higher duties allowance is allocated to the Deputy Chair. It also recognises the additional responsibilities of the Chairs of Committees and Working Parties by applying a $300 meeting fee.

· None-apparent

Approve the revised remuneration arrangements based on a different methodology.

· There are many different methodologies that could be applied. The advantages and disadvantages of each would need to be assessed. For example the greater the quantum of higher duties allowances for roles of additional responsibility the smaller the amount available to be distributed for councillors on a base salary; and vice versa.

· As per advantages.

The staff’s recommended option is one given this is most consistent with council’s current methodology for the allocation of the governance remuneration pool.

Considerations

Given that this is an administrative matter, climate impact, environmental impact and Māori impact statement are not directly relevant.

1. Community views

It is unknown whether there are any particular views within the community regarding the distribution of elected members’ remuneration. Some members of the public may not be aware that the Remuneration Authority sets the governance remuneration pool for each council and it is then for each council to then provide a proposal how it best be distributed to reflect its governance arrangements.

2. Financial implications

There are no financial implications in the sense that the total governance pool remains unchanged. Depending on the methodology approved by council, individual councillor’s salaries will be adjusted according to the new remuneration arrangements.

3. Implementation issues

Following a resolution of council regarding the methodology for the revised remuneration arrangements, staff will collate the necessary information in order to lodge a revised proposal with the Remuneration Authority prior to the 23 February 2024 deadline.

Subject to the Remuneration Authority’s approval and inclusion of the revised remuneration arrangements in the next determination, the new remuneration rates will be backdated and will take effect from the day after the day on which the remuneration arrangements were confirmed by council resolution.

4. Significance and engagement

In relation to section 79 of the Local Government Act 2002, this decision is considered to be of low significance when assessed against council’s significance and engagement policy because it is an administrative matter and is part of council’s day to day activities. This does not mean that this matter is not of significance to tangata whenua and/or individual communities, but that council is able to make decisions relating to this matter without undertaking further consultation or engagement.

5. Policy, risk management and legislative compliance

This report gives effect to the Local Government Act 2002 and the role of the Remuneration Authority to set the governance remuneration pool for each council.

Background/Tuhinga

The Local Government Act 2002 stipulates that the Remuneration Authority must set the remuneration, allowances and expenses of:

· Mayors;

· Regional Chairs; and

· Other local government members on local authorities including local and community boards.

The Remuneration Authority reviews the remuneration settings for local government every three years. This includes assessment of each council's place on its appropriate size index (i.e. regional, unitary or territorial index) and the issuing of revised indices, plus decisions on each council’s governance remuneration pool, the remuneration of the Chair (Mayor) and minimum allowable councillor remuneration for each council.

At the beginning of the triennium the new council is required to make decisions about the allocation of its governance remuneration pool and in particular their positions of responsibility and consequential remuneration, and on the remuneration for councillors with no additional positions of responsibility. The governance pool is intended to reflect the size of the total governance roles of any particular council rather than the number of councillors.

Important aspects of the pool system are:

· Positions that council decides to remunerate may include those on outside groups to which a councillor has been formally appointed by council - i.e. the remuneration is not necessarily solely attached to official council committees. Councillors are expected to be involved in a variety of community and cross-council groups as part of their basic role but, in some cases, if the extra work involved is extraordinary it can be recognised in remuneration.

· Councils MUST allocate the entire remuneration pool available. The quantum for each council has been set by the Remuneration Authority following a comprehensive review of the relative size of workloads of all councils and it is therefore expected that the available remuneration will not be withheld.

· Councillors who participate in Resource Management Act (RMA) or other such hearing processes are remunerated separately from this pool.

For the last two trienniums the Northland Regional Council has operated on the fundamental principle of an equal workload amongst elected members. In the current triennium the council formally considered remuneration and the allocation of the governance pool at its meeting on 22 November 2022 and resolved:

11. That based on the allocation of responsibilities outlined in the body of this report and Attachment One “Proposed New Governance Structure for the 2022-2025 Triennium”, that the pool for higher duties allowance of $580,951 be fully allocated as follows:

a) That the Deputy Chair receives a higher duties allowance of $10,000, bringing the Deputy Chair total salary to $81,368.88.

b) That remaining councillors receive a higher duties allowance of $17,658.88 each, bringing councillors total salary to $71,368.88. This is based on the underpinning principle of council that additional duties will be apportioned in such a manner that there will be an equitable workload between councillors.

In the same manner, an extract from NRC’s submission to the Remuneration Authority on the distribution of the remuneration pool and allocation of additional duty funds is as follows:

‘The Northland Regional Council continues to support the following key principles to maintain unity amongst its elected members and ensure a high performing team throughout the triennium:

• It is important to distribute work in an equitable manner amongst elected members;

• The council’s complex governance structure incorporates the full ambit of structures to support participatory decision making (including but not limited to committees, subcommittees, working groups and portfolio holders) which only serves to stress the importance of apportioning work in an equitable manner;

• Councillors are passionate about actively representing their region and participating where they can add value; and

• Equitable distribution of workload and remuneration for additional duties has functioned well to date, is a good reflection of council’s operations and it is the preference of council to retain this formula.’

NRC elected members voted to make governance leadership and structure changes at the November 2023 council meeting which means the fundamental principle of equal workload is no longer valid. This was also supported by a Notice of Motion ‘That the current NRC councillor remuneration package is reviewed, with a view to Council agreeing on an improved remuneration structure and package at the next Council meeting.’

The following membership table summarises the revised distribution of roles and responsibilities (based on the assumption that the membership of the new Infrastructure Committee and Audit Risk and Finance Committee and councillor portfolios as presented in the previous items are approved unchanged):

The Remuneration Authority states the following (refer to https://www.remauthority.govt.nz/local-government-members/governance-remuneration-pool/#proposals-for-changes-during-council-term-7 ) :

Proposals for changes during council term

The Authority will consider proposals made to it by councils requesting new arrangements that impact on the remuneration of local government members and will either issue an amending determination or consult further with these councils.

All proposals must be submitted to the Authority regardless of the additional level of remuneration proposed. The Authority expects councils to consider their full work programme for the triennium when making proposals following elections.

The Authority considers proposals for changes as they are received. The process of developing and producing a determination generally takes up to three months to complete as the drafting has to be peer reviewed by the Parliamentary Counsel Office and the determination is then published in the New Zealand Gazette.

In all cases where there is a change, councils need to wait till an amendment determination is gazetted by the Authority before they can make the changes to their local government members’ remuneration. However, all amendments (including adjustments to annual remuneration) are generally effective on and from the day after the day on which the council confirmed the position(s) of responsibility and the associated remuneration. Amendments are backdated in the amending determination to the effective date.

The Authority will accept proposals from councils no later than three months (normally 31 March) before the expiry of the principal determination (normally 30 June).

The next amending determination, if required, is scheduled to be issued by the Authority in late March 2024. Proposals for changes from councils to be included in this amending determination will not be accepted after 24 February 2024.

Context

NRC’s current distribution of its remuneration pool ($714,843) is as follows (as per the Local Government Members (2023/24) Determination 2023 https://www.legislation.govt.nz/regulation/public/2023/0142/latest/LMS859909.html#LMS860388 ):

It should be noted that the Remuneration Authority states:

Requests to increase total governance remuneration pool

A council cannot generally make a request for an increase in the size of its governance remuneration pool if it considers that it is not sufficient to meet needs. However, under extraordinary circumstances (for example following a major natural disaster) the Authority might agree to an increase.

Of the 11 Regional Councils, three base their remuneration on an equal workload and eight have apportioned their governance pool according to positions of additional responsibility. Southland and Taranaki are provided as two examples of this latter arrangement:

Potential Methodologies

Each council that has apportioned their governance pool according to positions of additional responsibility has developed its own methodology and there are many different ways this can be done. Council informally discussed the review of elected members’ remuneration at a workshop held on 30 January 2024. At this time council considered four different methodologies as follows:

Methodology	Summary
Methodology 1	· Apply a set meeting fee ($300) for the Chair of each committee and working party.^{^[1]} · Set a $10k higher duties allowance for the Deputy Chair of council (applying NRC’s current methodology). In doing so, the Deputy Chair is not eligible for additional meeting fees if the Chair of committees or working parties (this is taken into account in the Deputy Chair additional remuneration). · Remainder of pool allocated to all councillors, excluding the Chair, over and above the minimum allowable remuneration set by the Remuneration Authority. · To note, council could approve a different quantum for the higher duties allowance for the Deputy Chair if it believes it more accurately reflects the higher duties of the Deputy Chair.
Methodology 2	· Apply a set meeting fee ($300) for the Chair of each committee and working party. · Don’t provide set a specific higher duties allowance for the Deputy Chair but rather apply the set meeting fee ($300) for the Chair/Co-Chair of committees and working parties and ($100) for council meetings. · Remainder of pool allocated to all councillors, excluding the Chair, over and above the minimum allowable remuneration set by the Remuneration Authority.
Methodology 3	· Apply a set meeting fee ($300) for the Chair of each committee and working party. · Set a $10k higher duties allowance for the Deputy Chair of council. The Deputy Chair is also eligible for the set meeting fee ($300) when the Chair/Co-Chair of committees and working parties. · Remainder of pool allocated to all councillors, excluding the Chair, over and above the minimum allowable remuneration set by the Remuneration Authority.
Methodology 4 – ‘The Waikato Model’	· The Deputy Chairperson of council position at base salary plus 30%, hence is not eligible for additional meeting fees to reflect other Chair/Deputy Chair roles. · The Committee Chairperson (A) positions as base salary plus 20%. For this example we have equated this to NRC Committee Chairs. · The Committee Chairperson (B) positions as base salary plus 15%. For this example we have equated this to NRC Working Party Chairs. · The Deputy Chairpersons of committees at base salary plus 3%. · Remainder of pool allocated to other councillors (over and above the minimum allowable remuneration set by the Remuneration Authority).

Should the higher duties allowances not sufficiently recognise the additional duties, council may wish to consider increasing the Deputy Chair’s allowance of $10,000 and/or may wish to increase the meeting allowances for Chairs from $300 to a higher figure.

This matter is now set down for formal consideration.

Attachments/Ngā tapirihanga

Attachment 1: Calculations of elected members' remuneration applying different methodologies ⇩

[1] It is suggested that the Chair/Co-Chair of NRC’s subcommittees, joint committees, working parties (other than the Chair of council whose remuneration is set by the Remuneration Authority and the Deputy Chair of council when a specific methodology is applied to determine remuneration) is remunerated a daily allowance of $300 per meeting – based on the scheduled number of meetings for the year. The value of this allowance is commensurate with provisions in NRC’s Non-Elected Members Allowances Policy which states that council will pay a maximum daily meeting (workshop) allowance of $300 for chairs or co-chairs.