S17A Service Delivery Reviews Strategic Planner’s Network 8 May 2015

Outline: What’s required? - Legislation How to do it – advice from SOLGM Current examples What we did at Waipa How it went Recommendations SOLGM meeting discussion – we weren’t there so don’t know what happened? Are you all aware of S17A and what it means? If so, skip those slides and just talk about what we have done so far and use as basis for discussion on next steps.

Purpose of local government: S10:1 “The purpose of local government is: (b)To meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses”. S17A was developed to encourage councils to review their current arrangements for meeting these “needs of communities” by looking at other options for delivery of those services that may be more cost-effective.

So - What’s Required? Section 17A:1 of LGA (Delivery of Services): ‘A local authority must review the cost-effectiveness of current arrangements for meeting the needs of communities for good quality infrastructure, local public services, and performance of regulatory functions’. Local authorities have 3 years to complete the first review - ALL service assessments must be completed by 7 August 2017 -even if the services have been reviewed just prior to the legislation taking effect (S2(1) Schedule 1AA LGA). each service must be reviewed at least every 6 years. S17A - introduced to encourage councils to seek greater effectiveness and efficiencies in service delivery through exploring collaborative mechanisms for the delivery of services. cost effectiveness –means delivering the service at the minimum possible cost in order to meet the stated objectives of the council in delivering the service – can consider other aspects than financial e.g. staff capacity to undertake related work. took effect on 8 August (the day after the Act received royal assent). There is no transition on section 17A. If an event has occurred that triggers the requirement to conduct a review since that time, you will need to conduct a review (unless the exclusion clause applies).

Triggers for Review? Outside of the first overall service assessment, there are 2 other triggers for a review. A review must be undertaken: when considering a significant change to relevant service levels (LOS); and when current contracts relevant to the delivery of that infrastructure, service or regulatory function are within 2 years of expiring (Section 17A:2). The requirements of s17A should be built into service delivery reviews, contract renewal processes and changes to levels of service so that staff factor them into their work, project timelines and budgets. Council staff need to decide how and when this work will be done - so that the process does not have to be done again (because one or two s17A requirements were left out the first time around).

When is a Review not required? S.17A:3 A review is not required if: delivery of that infrastructure, service or regulatory function is governed by legislation, contract or other binding agreement such that it cannot be changed within the next 2 years; or the local authority believes the cost of doing a review would outweigh the benefits (usually where a service is small, significant cost savings are unlikely; or a review has been conducted recently). First point – relatively easy to demonstrate Second point – more difficult and costly in terms of time and money. Could set a $ threshold trigger (SOLGM suggests $250k) SOLGM advice - Need to demonstrate the exclusion – explain why and then the results need to be presented formally in a report to elected members, even if no change is recommended.

Options that must be considered A review must consider options for the governance, funding, and delivery of infrastructure, services and regulatory functions, including but not limited to, the following options (s17A:4): Resp.   governance funding delivery 1. Local authority does all 2. Local authority Council CCO joint council-owned CCO another local authority another person or agency 3. delegated to a joint committee or other shared governance arrangement exercised by one of the above entities 4. Other options for delivery can be considered, e.g. carrying out some internal improvements to gain efficiencies.

Key Actions Required to meet S17A For collaborative delivery with other local authorities (e.g. water services) – could agree on a joint review – LASS? Council to determine the level at which the review should be set (E.g. the Group of Activity level – SOLGM advice). Council to decide if they want to set triggers for review – e.g. $ threshold or SEP thresholds Council to develop a forward programme to ensure that each service is reviewed by 7 August 2017 (and then every 6 years) Group Managers - review planned work and contract renewal programme to ID early any situations that would trigger a review. Can coincide with level of service reviews NB: It’s not recommended to programme reviews into the period leading up to a triennial election

S17A Exclusion Reports - contracts S17A:3(a) exclusion reports need to: Explain why agreement cannot be altered in the next 2 years; Resolution required from Council. The results need to be presented formally in a report to elected members, even if no change is recommended.

S17A Reports –LOS/contracts: S17A:2(a and b) reports need to: Document the options considered along with some attempt at costing them; Document which of those listed in s17A:4 were deemed ‘not practicable’ and why; Provide the basis on which conclusions were reached about cost-effectiveness; and Consider SEP – need to observe processes or criteria for assessing significance consider community views and preferences. Also applies to S17A:3(b) exclusion – report required outlining costs vs benefits of the options etc A. The results need to be presented formally in a report to elected members, even if no change is recommended. This is a policy judgement for elected members to make – options need to be considered and a preferred option chosen – with the reasons why to be noted. C. Need to estimate cost of different options. Need to assess the “cost-effectiveness’ of the different options, not to identify the least cost option. To do this you will need to consider rationale for service delivery, current and desired levels of performance. In-house – there may be some cost efficiencies through internal improvements. SOLGM suggest developing templates to ensure consistency in S17A reviews – using the same criteria to assess costs and benefits for each review. SOLGM advice on who should do the review and time it would take etc. Just note that consultants not required – maybe steering groups for bigger services.

Examples Issue Option to address 1. Water services has been working with other councils, as part of the Mayoral Forum work, to develop an enhanced shared service. The expectation is that the delivery review will be conducted to meet s17A so that all three councils involved will not have to carry out an additional s17A reviews. Regional process – e.g LASS

Examples Issue Option to address 2. Water services is currently looking to change the level of service on delivery of the drainage service - (included in the proposed LTP budgets). Relatively low $s. For services/contracts that are below the $ threshold or of minor nature - Report to show that cost of doing a review would outweigh the benefits – could be difficult to justify. Must document reasons for deferral and get report signed off by Council.

Examples Issue Option to address 3. The Roading Group is currently reviewing the roading service delivery contract. This example would trigger the criteria for a review as it may change the LOS and also the contract is being reviewed and can change within the specified 2 year period. There is a lot of money involved. For services/contracts above the $ threshold or of ‘significant nature – prepare a report that shows the requirements of S17A were complied with and get signed off by Council.

What we did at Waipa Developed Report Template that covers: How service aligns with Council's strategic direction Objectives for the service Current situation Options for service delivery that were considered Table of options considered with costs/benefits Preferred option – why is it most appropriate Assessment of significance and engagement Next steps – re contract specs We received legal advice that to demonstrate exclusion (costs/benefits) would be onerous. Costs – time/money/resources vs costs. Not carrying our the evaluative exercise leaves Council open to risk of challenge Therefore we developed a report to show that S17A requirements were met (high level) that covers all requirements (as advised by SOLGM). This was less work than meeting exclusion requirements – makes it efficient and effective – more cost effective. More difficult to contest the process e.g. by other contractors. Note: If responsibility for delivery of infrastructure, services or regulatory functions is to be undertaken by a different entity to that responsible for governance; a contract or binding agreement must be put in place that covers the requirements of s17A:5, unless the requirements of s17A:6 and 7 are met. Any such agreement must be made publically available unless it is information that could be withheld under LGOIMA (S17A:8 and 9).

How it went: Reluctance from engineers to comply – extra work and new requirement that they felt they shouldn’t have to do – so we tried to make it easy for them – report template Lack of ownership as it doesn’t fit neatly into one group of Council’s management structure Lack of leadership in Council about what to do & how to do the work required Other’s experience? Document their experience

Recommendations That Mayoral Forum/LASS develop a shared structure or approach for Groups of Activity reviews (for all Waikato Councils to use in their review programme of groups of activities by Aug 2017) 2. That Mayoral Forum/LASS ensures that all contracts for the review of shared service delivery at the regional level (by consultants) incudes all the options specified in s17A (e.g. waters review only covers off 3 of the options). If you get stuck or challenged say it came from me and that you will discuss with me and get back to them. We can save a lot of money for our councils if we pursue this further as a group. Note discussion on white board.

Recommendations 3. The Waipa DC report template be made available for SPN use (or is used as a base for a SPN group to develop further) for the review of service delivery contracts. 4. A SPN group develops a shared exclusion report template for services/contracts where the cost of doing a review would outweigh the benefits. 5. Decisions from this meeting be shared with Councils and Craig Hobbs’ workstream (Mayoral Forum). Note discussion on white board