Statement of Intent for 2005-2006 for the provision of Shared Services across all Local Authorities within the boundaries of the Waikato Region
Draft for Consultation – April 2005
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Preamble The Local Authorities within the boundaries of the Waikato Regional Council have for some time undertaken a number of joint activities with the purpose of reducing the cost of performing those activities to the community at large. More recently under the auspices of the Chief Executives Group the local authorities have been undertaking the development of new shared service initiatives in the form of a valuation database for the provision of an on-line updated database to all Councils who wish to prevail themselves of the service being developed. This Statement of Intent provides a public declaration of the activities and intentions of a CCO in the form of a company and it provides the accountabilities of the directors to the shareholders for the corporate performance as is intended by Section 8 of the Local Government Act 2002. The proposal is for all of the local authorities within the region to set up a Council Controlled Organisation by way of a company where each local authority will have a single share and this company will be used as an umbrella company for the future development of shared services through the region.
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Company Objectives 2.1 The objective of the company is to provide the local authorities within the Waikato Region with a vehicle within which they can develop shared services and provide these services to those local authorities that may from time to time wish to avail themselves of that process.
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Governance The company shall have six directors appointed as follows: a. One appointed by Waikato Regional Council b. One appointed by Hamilton City Council c. One by agreement between Franklin and Waikato District Councils d. One by agreement between Thames Coromandel, Hauraki and Matamata Piako District Councils e. One by agreement between Waipa, Otorohanga and Waitomo District Councils f. One by agreement between South Waikato, Taupo and Rotorua District Councils Unless otherwise agreed by the board each appointee shall be a Chief Executive Officer of a local authority. In addition the board may appoint up to three professional directors to supplement the expertise of the Chief Executives. The CCO will conduct itself in accordance with its constitution, its annual statement of intent agreed with the shareholders, and the provisions of the Local Government Act 2002.
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Nature and Scope of Activities 4.1 A principle nature and scope of the activity for the proposed company is to provide shared services to all local authorities within the Waikato Region. The
Statement of Intent for 2005-2006 Provision of Shared Services Across all Local Authorities within the Boundaries of the Waikato Region RE259317 Page 2 of 5
intention of the company would also be to provide by way of sale to local authorities outside of the region the processes and systems as set up under their individual agreements. 0.0 The company under the direction of the local authorities will pursue all opportunities for developing these shared services that may add benefit to the community either through enhanced services or reduced cost. Consideration will be given to the development of shared service products where a majority of local authorities within the region believe that they are of value. With the objective of providing to the public by way of the most effective service access to information held within the region that may be of value to the community and is readily accessible using modern technology and processes. The company will explore all possible avenues for the provision of these services itself or for the contract provision of those services from outside parties entirely dependant on each being subject to a rigorous business case.
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Future Developments 0.0 While the initial product to be offered is on a shared valuation database it is envisaged that the company will continue to develop new products to be made available to the territorial authorities within the region while at the same time exploring other opportunities to be undertaken in partnership with other local authorities within New Zealand that might add products to the current stable, e.g. aerial photographs, GIS systems, emergency management systems etc.
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Performance Targets 0.0 For the initial purposes of this statement by its very nature is an initiating statement and hence the initial performance targets are shown as best estimates and will be fully reviewed on a year by year basis to ensure that the products being offered under this agreement continue to provide state of the art and cost effective processes for the shareholders. All products to be fully costed including development costs and to be recovered by way of revenue of a maximum of a five year period. That the company will enter into long term contracts of at least 3 years duration with each of the participating parties in relationship to any product development so as to ensure the costs of development are spread equitably between the partners and over a realistic time frame. The need for guarantees from the participating parties to provide for the capital and cash requirements of the organisation and to provide guarantees to the company based on prevailing interest rates in the market to cover the cost of the development of new products. To maintain a positive cashflow such that equity ratio is maintained at least 40%. To survey the customers once per year and to ensure that there is at least a 90% satisfaction with the services being provided.
Statement of Intent for 2005-2006 Provision of Shared Services Across all Local Authorities within the Boundaries of the Waikato Region RE259317 Page 3 of 5
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Policy Statement 7.1 Statement of Accounting Principles The financial statements would be those as a company wholly owned by the local authorities within the Waikato region in the proportion of one share per local authority. The financial statements be prepared in accordance with the requirements of the Local Government Act 2002 and the Finance Reporting Act 1993. Measurement Basis The company will follow the general accepted accounting principles recognised as being appropriate for reporting of earnings and financial position on the international accounting standards basis and that any liability for overseas funding of equipment or processes would be based on the prevailing exchange rate as at balance day. Specific Accounting Principles The following particular principles which have a significant effect on the measurement of the financial position are to apply. 7.3.1 Accounts Receivable are to be stated at their expected realisable value after writing off any known bad debts and providing for doubtful debts. 7.3.2 Investments to be valued at the prevailing market value 7.3.3 Fixed assets to be recorded at cost less accumulated depreciation other than where freehold lands may be required. This to be based on the normal accounting processes for the valuation of land. 7.3.4 Intangible Assets Where the purchase is made of intangible assets such as intellectual property then these are to be capitalised and written off on a straight line basis over their expected life but no greater than 4 years. 7.3.5 Depreciation to be provided on a straight line basis on all assets other than land and align with normal accepted depreciation for the types of services that are being developed. 7.3.6 Inventories It is not envisaged that the company will hold inventories other than those that might relate to the provision of electronic services to a number of parties and hence that they will be valued at net realisable value. 7.3.7 Taxation Taxation will be provided as required against the company in line with the required legislation. 7.4 In accordance with the Public Audit Act 2001 and the Local Government Act 2002 the office of the auditor general will be responsible for the audit of the financial statements of the company. It is not envisaged that the board will make any recommendation as to dividend as in the initial five years any savings will be used to reduce service costs or for reinvestment in new products and upgrades. The Forecast Financial Statements for the first 3 years are attached to this statement. They are prepared on the basis of the operation of the SVDS only, and will be updated on an ongoing basis as new products or services are developed.
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In accordance with the Local Government Act 2002, the ratio of Consolidated Shareholders’ Funds to Total Assets has been included within the Forecast Statement of Financial Position. 7.7.1 Consolidated Shareholders’ Funds are defined as the sum of retained earnings, reserves and paid-up share capital. 7.7.2 Total Assets of the entity encompass Current and Non Current Assets as disclosed in the Forecast Statement of Financial Position. This includes, but is not limited to, Bank, Debtors and Operational Assets.
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Information to be provided to Shareholders The company will deliver the following to shareholders: 0.0 Within 2 months of the end of the first half of the financial year the statement of Financial Performance, the Statement of Movements and Equities, Statement of /Financial Position, Statement of Cashflow and the Statement of Service Performance. 0.0 Within 3 months of the end of the financial year the following audited statements the Statement of Financial Position, a Statement of Movement & Equity, a Statement of Financial Position, Statement of Cashflows, Statement of Service Performance plus a summary as to how the company has gone against achieving its objectives and its prospects for the next financial year. Also a report in relationship to the company’s medium to long term plans.
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