Transport Committee 03 October 2012
File No.: CP2012/17400
Purpose
1. The purpose of this report is to present the Auckland Transport Budget Submission Report for the draft Annual Plan 2013/2014 to the Transport Committee for review and consideration. This report highlights those key issues and budget matters that are likely to affect the preparation of CCO budgets for inclusion in the draft annual plan and which the Transport Committee is asked to consider in completing its review on behalf of the Mayors Office.
Recommendations
a) That the Transport Committee i) ii) Receive and note the Budget Submission Report prepared by Auckland Transport Note that it has been requested by the Mayor to review the draft budgets for Auckland Transport for 2013/2014 and identify the matters relating to Auckland Transports budget that the Mayors Office should take into consideration when developing the Mayoral Proposal on the draft Annual Plan 2013/2014 Consider and discuss the matters set out in the Auckland Transport Budget Submission report, together with those matters set out in this summary report, with Auckland Transport Identify those matters it wishes the Mayors Office to consider in respect of Auckland Transports draft Annual Plan 2013/2014 budget and its Budget Submission Report.
iii)
iv)
Discussion
Introduction / Context for the CCO Budget Submission Reports 2. The Mayoral memorandum to CCOs dated 9 August 2012 set out the high level direction and the political review process for the development of the Mayoral Proposal and for the draft Annual Plan 2013/2014. 3. In order to achieve a consistent approach to the development of the draft Annual Plan 2013/2014 budget the Mayor set out the following parameters within which Auckland Council and CCO budgets are expected to be developed: x x x x Year 2 of the LTP is the starting point and changes are expected to be minimal The rates cap for year 2 was set at 4.9% in the LTP. Inflation is running well below that and the rates increase should be well below 4% Delivery of priorities set out in the LTP needs to be a key driver of the budget these are attached for your information Any new proposals for expenditure must: o Not re-litigate decisions already made in the LTP o Not add to the rates impact - so be offset by other savings o Demonstrate why this project is more effective at delivering on our strategic priorities than what is already included in the LTP.
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4. Each CCO was requested to submit their Annual Plan 2013/2014 budgets for initial review by 14 September 2012. A Councillor Working Party was established to assist the Mayors office by reviewing all CCO budgets and budget changes in line with the parameters set out above except for Auckland Transport whose review is to be undertaken by the Transport Committee. 5. It is expected that the Transport Committee will review the budget baseline for 2013/2014, as set out in year 2 of the current LTP, and the changes proposed by Auckland Transport to give effect to the parameters set out above. The Transport Committee is expected to provide its comments to the Mayors Office and that these will be taken into account in the development of the Mayors proposed budget for the draft Annual Plan 2013/2014. 6. To facilitate the budget review process each CCO was requested to prepare a Budget Submission Report (BSR). BSRs were due on 14 September 2012. The purpose of the BSR is to outline, in respect of each CCO, the: x x x x x x planned activities and budgets for 2013/2014, as set out in year 2 of the current LTP focus, priorities and alignment of strategies for the CCO and Auckland Council for the period covered by the 2013/2014 draft Annual Plan progress made by the CCO in delivering on, or meeting, the reprioritisation and efficiency targets set for the 2012/2013 financial year (as agreed during the finalisation of the Councils LTP) investment proposals for increased, or changed, funding requirements for the 2013/2014 draft Annual Plan rates reduction options for the Annual Plan 2013/2014. In developing the BSR each CCO was asked to identify rates reduction options (service level changes) equivalent to at least 3% of the rates funded operating grants from Auckland Council to the CCO the budget and performance risks associated with the delivery of the draft Annual Plan 2013/2014 within the parameters set by the Mayor.
7. To assist the Transport Committee in its review of Auckland Transports BSRs, and the proposed budgets for the draft Annual Plan 2013/2014, the following information is attached to this report: x x x Attachment A: Auckland Transport Funding and Financial Statements as per the Auckland Council Long Term Plan Attachment B: Auckland Transport BSR Attachment C: Summary of Auckland Transport OPEX and CAPEX projects
Auckland Transport Budget Submission Report (BSR) 8. To assist the Transport Committee with its review, Council Officers have completed an initial high level review and evaluation of the information set out in each BSR. Where appropriate, key issues and significant other matters have been identified for the Transport Committees review and consideration. These matters are set out below. Auckland Transport will be in attendance to present and discuss the BSR. General: x Auckland Transports BSR is included as Attachment B to this report. x On overview of the activities, funding and financial information of Auckland Transport, as included in the Auckland Council LTP, is set out in Chapter 5 of Volume 5 of the LTP (refer Attachment A) x Auckland Transport intends to deliver its activities and services within the parameters set out in the Mayors memorandum to CCOs. In particular: o Auckland Transport expects that, as a starting point, its services and activities will be delivered within the budget parameters set out in year 2 of the LTP. An overview of the CAPEX and OPEX budgets, and associated Council Funding, is set out in the BSR o Auckland Transport has not proposed any increase in funding for 2013/2014 (there are no investment proposals attached to the BSR)
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Transport Committee 03 October 2012 o o
2012/2013 Efficiency Target: x The BSR highlights the reprioritisation and efficiency targets that were included in the LTP for 2012/2013. It details the areas where Auckland Transport has proposed achieving these savings and efficiency targets. In terms of the development of the draft Annual Plan 2013/14 it is important that the savings and efficiencies are sustainable across the LTP. The key matters that the Transport Committee should consider in discussions with Auckland Transport include: o Progress in implementing and delivery of the 2012/2013 efficiency savings; o Whether savings and efficiencies identified are sustainable for the draft Annual Plan 2013/2014 budget o Whether delivery of the savings has, or will, impact Auckland Transports ability to meet the performance targets set out in the LTP and SOI x The BSR notes that in delivering on the savings and efficiency target for 2012/2013 management felt the remaining $6.2m of the funding gap could be managed by reducing unsubsidised renewal expenditure on footpaths by $6.2m. While not an operating item it does mean that the overall funding position of AC would remain in line with its funding expectation for revenue and debt funding. ATs operating expenditure would show a $6.2m funding gap. The $6.2m surplus in renewal funding would net this off. This change has been reflected in the updated activity statements . The implications of this savings option need to be carefully considered to determine whether it meets the objectives / expectation set by Council and what impact the savings options have on decisions made by Council at the time of finalising the LTP. The sustainability of this efficiency option for 2013/2014 also needs to be considered and discussed with Auckland Transport given the impact that it would have on the overall footpaths asset management plan and service levels. The significant matters that the Transport Committee may wish to discuss with Auckland Transport are: o Whether the effect of this savings option is that funds provided by Auckland Council to complete capital asset renewals are now being directed to support ATs operations. o Whether this savings option best meets the objectives / expectation set by Council. o Whether this savings option carries through in to the 2013/2014 budget. The sustainability of this option for 2013/2014 also needs to be considered and discussed with Auckland Transport to assess the impact that it would have on the overall footpaths asset management plan and service levels. o Whether the savings option is consistent with the Councils funding policy or the SOI between Auckland Council and Auckland Transport. o Whether the proposal is consistent with decisions reached by Auckland Council in finalising the LTP in agreeing the level of footpath maintenance and renewals. Investment Proposals: x There are no investment proposals for Auckland Transport for the draft Annual Plan 2013/2014. Rates reduction options: x Auckland Transport was requested to identify options for reduction in the rates funding requirement from Auckland Council of at least 3%. The BSR identifies the following options for cost reduction. Further details of the options identified are set out in the rates reduction template attached to the BSR. The Transport Committee have been requested by the Mayors Office to consider the options proposed by Auckland Transport.
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Auckland Transport has identified rates reduction options of $20.220m (Gross) or $14.895m (net) The BSR has been reviewed and approved by the Board of Auckland Transport.
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Cost reduction options
Discontinue berm mowing/maintenance in the Central area Reduce service levels for street cleaning and town centre cleaning Region wide Reduce the Enforcement zone in all bus lanes from 70mtrs to the National guide of 50mtrs Warnings for Warrant & Registration Offences 3% cost reductions and service level reductions in bus facility security, cleaning and maintenance 3% cost reductions and service level reductions in bus facility security, cleaning and maintenance 3% cost reductions and service level reductions in bus facility security, cleaning and maintenance Bus service demand response and emergency contingency funding reduction during year 1 (2013/14) of bus service network change from $3M to $1M New bus service (1st priority service improvements) funding reduced New bus service (2nd priority service improvements) funding reduced New ferry services (Hobsonville and Beachaven) would be delayed 2-4% reduction in existing bus services; low demand services would be prioritised to minimise customer impact and patronage loss Increase fares up to 5% above cost indexation levels to increase fare revenue and reduce subsidy Increase fares up to 5% above cost indexation levels to increase fare revenue and reduce subsidy Potential Gross Savings Potential Net Savings (including NZTA funding)
Indicative annual saving $000 3,000,000 800,000 3,170,000 2,600,000 200,000 150,000 300,000 2,000,000
NZTA Subsidy N N N N Y Y Y Y
2,000,000 2,000,000 600,000 2,000,000
Y Y Y Y
400,000 1,000,000
Y Y
20,220,000 14,895,000
A summary of Auckland Transports OPEX and CAPEX projects for the draft Annual Plan 2013/14 (as currently set out in the LTP) is included in Attachment C to this report. We have noted the options identified in the BSR and consider that the key matters that the Transport Committee should consider in discussions with Auckland Transport include: o The process or criteria that Auckland Transport used in prioritising the rates reduction options set out above. In particular, the Transport Committee should consider the relative weighting of the options across all of Auckland Transports activities or on the projects outlined in Attachment C to this report. o What impact, if any, each of the options identified will have on Auckland Transports ability to meet their performance targets. o Whether these options are incremental to the savings and efficiency options identified for the 2012/2013 financial period. o The implications that each option has, collectively or individually, on the priorities set out in the LTP for 2013/14. o The overall risk to NZTA funding. This is capped and the planned programme may have already reached the maximum allowable subsidy.
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Transport Committee 03 October 2012 Performance and Budget risks: x The BSR identifies a number of generic performance risks associated with the proposed service level and rates reduction options. While we would agree that the performance risks identified are complete they are limited by the lack of quantification and specificity in relation to each option. For example, the BSR identifies the potential for slowed service levels and the risk of deferred maintenance liabilities. The budget and performance risk associated with each option needs to be more fully identified. x The BSR notes that with the savings identified for 2012/2013 there is limited capacity for further cuts in the roading activity. The impact is that additional savings reductions need to be targeted to other activities. The Transport Committee may wish to consider and discuss with Auckland Transport how savings and efficiencies can be effectively balanced over all of the activities of Auckland Transport.
Consideration
Local Board Views
9. Local boards will have the opportunity to provide feedback on any firm proposals and options as part of the annual planning process.
Maori Impact Statement
10. All tabled investment proposals and rates reduction options are required to specifically identify and describe any direct impact on M ori outcomes or initiatives. Activity profiles will be updated as part of the Annual Plan 2013/2014 to include a M ori Impact Statement.
General
11. This has been assessed against the significance policy and is not considered significant.
Implementation Issues
12. Not applicable
Attachments
No. A B C Title Auckland Transport Funding and Financial Statements as per the Auckland Council Long Term Plan Auckland Transport budget submission report (BSR) Summary of Auckland Transport OPEX and CAPEX projects Page 185 193 201
Signatories
Authors Authorisers Chris Carroll Manager Planning & Policy, Finance Ree Anderson - Manager Regional Strategy, Community & Cultural Policy Roger Blakeley - Chief Planning Officer
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Correspondence
File No.: CP2012/17154
Recommendations
That the following inward correspondence be received and outward correspondence be endorsed: 29 August 2012 Letter to Dr David Warburton, Chief Executive, Auckland Transport re: Matters raised at the Transport Committee meeting 1 August 2012 Letter from Ken Haydock re Naming of Electric Multiple Units (EMUs) Letter to Hon Gerry Brownlee, Minister of Transport, re Infrastructure and Engineering Business Plan from Dr Denys Trussell, Spokesperson on Transport
29 August 2012 11 September 2012
Attachments
No. A B C Title Letter to David Warburton, Auckland Transport re: Matters raised at the Transport Committee meeting 1 August 2012 Letter from Mr Ken Haydock re: Naming of Electric Multiple Units (EMUs) Letter to Hon Gerry Brownlee re: Infrastruture and Engineering Business Plan from Dr Denys Trussell, Spokesperson on Transport Page 207 209 211
Signatories
Authors Authorisers Desiree Tukutama - Committee Secretary Darryl Griffin - Manager Democracy Services Roger Blakeley - Chief Planning Officer
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APPENDICES
Item 5.4 - Appendix A - Domain Rail Portal Supplementary Information - Page 217
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