ORDINARY MEETING 28 MAY 2014...2014/05/28 · Presently, Council is tracking favourably to budget and expect to exceed the year end outcomes forecast in the Fourth Budget Review

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Agenda - Ordinary Meeting 28 May 2014 - #4371142

ORDINARY MEETING

28 MAY 20147

CHIEF EXECUTIVE OFFICER'S STRATEGIC MONTHLY REPORT

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RECOMMENDATION:

That the report be noted.

EXECUTIVE SUMMARY:

There are no critical issues that have impacted on the performance of the organisation during the past month. Management continues to monitor its performance across a range of key performance indicators.

REPORT

1. CURRENT SIGNIFICANT ISSUES

Over the past 4-6 weeks the Council has been a key player in two significant events for Cairns, they were the Mountain Bike World Cup and the Australian Tourism Exchange (ATE).

The second round of the 2014 MTB World Cup was held at the Smithfield Regional Park, behind James Cook University in late April. Council had involvement at both the corporate and operational level. Our sponsorship resulted in significant brand exposure for the Council, on site and around the world. While operationally the staff involved in site works and other logistics around the event have been highly praised by organisers, visitors and competitors.

In mid-May the ATE was held in Cairns. The Australian Tourism Exchange (ATE) is the southern hemisphere's largest annual travel and tourism business-to-business event.

Council’s direct involvement in the ATE was limited but indirectly over the past 6 months or so the staff had been working to ensure that the look and feel of the City Centre was attended to. This involved dealing with over 250 works request for footpath, gardens or other minor repair items. The way-finding signs were installed in key locations around the City Centre. Staff were also involved in assisting ATE organisers with road closure and other approvals for the event and related activities.

For both events Council staff have been acknowledged and recognised by the organisers for an outstanding contribution and as such our staff need to be duly congratulated.

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Also in May Council hosted members of the James Cook University and at that event a Memorandum of Understanding between JCU and Council was signed by the Mayor and Professor Harding the Vice Chancellor.

The MOU confirms our intention to work collaboratively to achieve the following:

To work in partnership to foster a learning community;

To address issues and identify opportunities to undertake research and development beneficial to both parties and/or the wider community;

To complement and strengthen the capabilities of both parties through sharing knowledge information and resources;

To develop JCU as the primary higher education facility and research service provider in Far North Queensland and to build a higher education critical mass in the region;

To enhance informed decision making and governance to deliver better outcomes;

To act together and with stakeholders to be a repository of regional knowledge and research capacity; and

To work cooperatively and to support one another to identify and secure available funding from a wide range of sources including all levels of Government and other potential external partners and sources.

2. UPDATE ON CORPORATE/OPERATIONAL PLAN IMPLEMENTATION

All third quarterly reports for the Departments on the implementation of the 2013-2014 Operational Plan against the Corporate Plan were tabled at meetings in April.

A summary for how the organisation performed overall for the quarter is below, together with commentary for those items that were recording as being or trending unsatisfactorily.

Operational Plans 2013/14 Pending Satisfactory Marginal UnsatisfactorySummary 1st Q 38 351 16 20Summary 2nd Q 21 368 36 20Summary 23rd Q 15 378 27 11

UnsatisfactoryCommunity, Sport & Cultural Services

CS&CS Policies and Administrative Instructions: Number of policies and administrative instructions overdue for review

BPAS Assign dedicated officer to investigate and improve Departmental Tactical Asset Management Plans

Creative Venues And Creative Partnerships (Civic Theatre)

Roll out a facility wide recycling program to reduce landfill waste by 70%.

Parks and LeisureReview Botanic Gardens Masterplan Develop MOU with Society for Growing Australian Plants.

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Water & Waste

Water Operations Develop a ten (10) year cycle for inflow / infiltration Inspections.

Water Quality Water Supply Quality – Urban and Rural. pH 98% within 6.5 - 8.5

Water Services – Reticulation: Service Response

Service Response Priority 1 events when service restored within 1 hour > 98%Number of blockages recorded per 100 km of main < 10 per 100 km. Result 18 per 100km

Water Maintenance Preventative maintenance <20% of planned maintenance outstanding.

Water Infrastructure (Planning & Design)

Timely and accurate advice on Development Applications 90% completed by date.

3. MAJOR KEY PERFORMANCE INDICATORS

OPERATIONAL

From an operational perspective the organisation is functioning in a solid position, programs and service delivery are generally on target for this time of the year. Some seasonal pressure is occurring on some of our construction programs, with persistent rain slowing progress.

FINANCE

The financial position of Council has been reported for the period ending 25 April 2014.

Council’s operating position at month end is a $7.1M surplus, $4.9M ahead of budget. Driving the favourable variance is employee benefits ($3.9M), net rates and utility charges ($758K) and legal services ($386K). In addition, net internal charges are $5.4M ahead of budget however this variance should be considered in conjunction with unfavourable variances in materials and external services of $4.8M.

Presently, Council is tracking favourably to budget and expect to exceed the year end outcomes forecast in the Fourth Budget Review.

EMPLOYEES

Council’s FTE as at 31/04/2014 was 1264 of which 1005 are full time permanent.

Turnover rate has declined over the last 12 months and is currently tracking at 4.91%, which is well below the KPI of 10% (this figure does not include agency staff, de-amalgamation or voluntary redundancies).

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Councils Lost Time Injury Rate (LTIFR) of 29.31 is slightly lower than the three year average of 30.49.

The Lost Time Injury Duration Rate (LTIDR) of 18.65 is well below the three year average of 26.65. The LTDR will rise due to three long term rehabilitation cases.

Councils Days Lost due to injury for the financial year to 30 April of 1063 days is well below the three year average of 1741 days. The days lost are expected to increase significantly due to the mentioned long term RRTWC cases.

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CAPITAL

The 2013/14 Capital Works Summary report is tabled on a monthly basis. Each department and the relevant committee would have discussed and reviewed this at the relevant workshop.

As at the end of April, Council has spent approximately 64.7% of the capital budget. Forecast year end expenditure is expected to be $114.2M.

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4. RISK AND COMPLIANCE UPDATE

The reporting on the Risk categories is a quarterly activity. Such was last reported to Council in February.Update Major projects are reported to Council on a monthly basis and discussed at the respective Committee Workshop. Projects that are currently of interest include:City Centre Alive.Flecker Conservatory Tobruk Pool Redevelopment.Moody Creek Detention Basin.Cairns Water Security Strategy.

5. MATTERS FOR NOTING

Reef Guardian Councils Steering CommitteeCouncil is a member of the Reef Guardian group of Councils, who meet twice a year. The program is run by the Great Barrie Ref Marine Park Authority (GBRMPA).

The previous meeting was held in Cairns in October 2013. The latest meeting was held on the Sunshine Coast to coincide with the LGAQ forums, so that member Councils could attend.

The overview of the day’s main topics was:

1. Need to look at the bigger picture and the cumulative issue that are impacting on the reef.

2. Legacy issues from practices or actions previously undertaken are still causing impacts.

3. The need for restoration works, this may come back to Councils to be involved in.

4. Silting of Harbours.5. Riparian vegetation, its importance along creek systems of all sizes.6. The timing of the Northern Clean Up Australia Day.7. Further reporting from the Reef Urban Stormwater Management

Improvement Group (RUSMIG).

The papers from the meeting are available for review

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Towards Financial Leadership - 3rd Local Government Finance Summit

This event organised by LGAQ featured speakers from both state and local government, and as well as Queensland Treasury Corporation.

Presentations were given on issues such as:

Financial Leadership - Being Accountable and Exerting Influence

Local Government Briefing on Emerging Issues

The Sleeping Giant Awakes: Asset Management and Depreciation

Financial Report: What Elected Members Should Ask for

Linking Financial Management to Corporate Planning

Rating Solutions

Internal Audit Functions - Costly or Valuable?

I have provided some key points from two main speakers to highlight the tenor of the Summit.

President Cr De-Witt

LGAQ have been asked to think about the following:

what role benchmarking and performance measurement might play to help lead the future performance of councils.

the training and professional development opportunities for elected members and our senior staff to support a culture of continuous improvement.

the need for new support services and resources so that councils serious about initiating change can be provided with toolkits for the task.

how we can best communicate and promote the value councils deliver to their communities on a daily basis, and how we may want to work to deliver even more value.

Craig White CFO Australian Agricultural Company Limited

From a private sector perspective local government is ‘big business’ accountable to its constituents and communities in contrast to shareholders in the private sector – both have responsibilities to various stakeholders

Local governments in Queensland face a number of challenges, in particular:

Increasing community expectations for provision and level of services

Growing demands of an ageing population and local government workforce of which 49% are over 45yrs (37% nationally)

Replacement of ageing infrastructure, particularly with the loss of State Government subsidies for water and sewerage development

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Growth management problems in coastal and resource areas

Diminishing rate base in many rural areas

Cost of compliance - legal, governance and legislative

2011 and 2013 cyclone and flood reconstruction demands

Ongoing reform pressures from Federal and State Governments

Fiscal restraint and consolidation at State and Federal Government level

Key issues from a financial perspective include:

Recurrent operating deficits recorded by a significant number of local governments (approx 49% FY2010 to 2012)

Inadequate or incomplete asset management plans to appropriately manage and forecast asset lifecycle costs

Lack of optimisation of the use of debt to fund capital infrastructure

Not maximising revenue generation opportunities

Inadequate use of long-term financial forecasts

Inadequate business cases developed for major projects

Financial Leadership – Being accountable and exerting influenceHow can we achieve it?

“if its foggy in the pulpit, then its misty in the pews”

Leadership is a privilege bestowed on you , by those who believe in you

Define and communicate vision and strategy

Align business structure to strategy

Align organisational structure to business structure and build bench strength in your finance teams

Define and implement appropriate KPIs to drive the right behaviours and performance – ensure an organisational mindset of ‘investing’ rather than ‘spending’ the budget

Ensure appropriate Delegation of Authority (DOA) is in place:- Designed to allow the organisation to operate faster without losing

control.- NOT to just apply the brakes.

Ensure rigorous cost: benefit analyses are undertaken:- Financial projects: rigorous NPV, IRR and return on capital

employed (ROCE) analysis- Non-financial projects: objective assessment of social and

community benefits

Conduct project status reviews and post-audit reviews

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Copies of the presentations are on LGAQ website.

Civic Leaders Summit- Productivity Plus

This year the LGAQ Summit theme was 'Productivity Plus'. The LGAQ considered that as productivity is on the agenda for all councils it warranted having a summit designed to focus on such.

The following are some key points from two main speakers from the Summit.

Australia's Challenge To Lift Productivity- Graeme Samuel AC

Long term structural measures for a flexible economy.It’s about productivity- producing efficiently with innovation, producing more with importsNational Competition Policy – the most successful structural reform in recent historyEconomic reform has slowed and in some areas has stalled since 2005Two key areas of focus

1. Wealth & Incentives -Need to end the age of entitlementWhy put something in place?Was it in the public or private interest?If public, does it still exist?Is there another way?

2. InfrastructurePrivate funded – PPPUser pays

Leadership- the three c’sConvictionCourage Communication

Governments should not be running businesses that turn a profit

In Pursuit Of Productivity - Transformational Leadership - Roger Corbett AO

Not a problem with productivity, but more so, its innovation.Delivering productivity- harder in public sector then private.

Need for self interest.

Innovation- costs jobs initially but eventually creates jobs in different sectors, eg digital revolution.

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Vital model to follow:Direction for all to followLeadership- integrityPurpose and commitmentUrgency drive and directionAssistance from outside help is not a bad thing

Structure of Project management- 4 stage-Concept idea; Feasibility;

Define exactly what; how, how much; how long it will takeImplementation;Harvest benefits

Commitment to change will deliver successInnovation without change is impossible If we take an idea into the boardroom, a better idea should be taken out.

Other sessions covered topics such as:

Council Productivity Targets- Greg Hallam PSM Chief Executive Officer, LGAQ.

"How to improve Productivity in Local Government - what works and what doesn't” Cr Ray Brown; Cr Mark Jamieson; Cr Julia Leu; Chris Rose; Natalie Kent; Bernie McCarthy.

Queensland Plan Anne Moffat Premier Department.

The New IR Environment And Council Opportunities To Improve Productivity Tony Goode LGAQ.

Social Media - A Cost or An Investment For Councils?Craig Johnstone Media Executive, LGAQ; Professor Mark Pearson.

Bring Productivity To Your Council Through Apps- Stephen Teulon Aris.

Shared Services and Outsourcing- Brent Reeman; Cr Commerford;Cr Noel Playford; Mark Watt; Brett de Chastel; Tim Rose.

Council Productivity from a State Perspective Craig Evans Director-General, Local Government Community Recovery and Resilience.

Pushing the Boundaries but Not Crossing the Line- Tim Fynes-Clinton, King & Company; Joan Sheldon.

Copies of most of the presentations are on LGAQ website.

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LGAQ Study Tour

In February 2014 Council approved the Chief Executive Officer’s participation in the LGAQ Study Tour to England from 7-11 April 2014.

The tour was hosted by the Local Government Association of Qld and representatives from Ipswich City Council, Mackay Regional Council and Propel Partnership Services were in attendance.

The purpose of the visit was to provide a targeted overview of how strategic partnering/shared services arrangements have evolved in the UK over a number of years. This was intended to assist in the assessment of the current proposal to enter into a shared services arrangement with Propel Partnership.

The site visits were structured in such a way that the group will meet senior council officers/councillors together with senior representatives from the private sector.

The study tour was beneficial from the point of view of gaining a closer and better understanding of the various shared service models.

Outsourcing:• Good scope and brief on the business elements to be outsourced.• There must be strong contract management.• You can’t outsource a problem.• Prior to commencing this model, take the 20-30% savings out of the Council

before handing it over to the contract, and then ask for a further level of savings.

Services shared between Councils:• Commitment at Councillor and Administrative levels.• Clear understanding of political masters.• What will be the status of staff from different Councils.• Services delivered through the Service Centres maintained specialist skills.

Partnership with a third party:• Includes elements from all of the above.

From a broader Local Government perspective an overall message from the UK is that Councils are moving their business to an on line experience and reducing direct customer contact for administrative and high volume activities.

The full report is attached (#4347956).

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6. OUTSTANDING ITEMS

There are no outstanding items.

Peter TabuloChief Executive Officer

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UK Study Tour- April 2014INTRODUCTION

In February 2014 Council approved the Chief Executive Officer’s participation in the LGAQ Study Tour to England from 7-11 April 2014.

The tour was hosted by the Local Government Association of Qld and representatives from Ipswich City Council, Mackay Regional Council and Propel Partnership Services were in attendance.

The purpose of the visit was to provide a targeted overview of how strategic partnering/shared services arrangements have evolved in the UK over a number of years. This was intended to assist in the assessment of the current proposal to enter into a shared services arrangement with Propel Partnership.

The site visits were structured in such a way that the group will meet senior council officers/councillors together with senior representatives from the private sector.

BACKGROUND

Local Government in the UK

While local government in the UK is involved with a broader cross section of functions and services then what is currently handled by Qld councils, services such as Health; Education and Emergency Services, there are the common themes being experienced. These are, reducing financial assistance from the central government, rising costs of service delivery, increasing demands from residents.

The UK Local Government Association has reported that at least 337 councils across the country are engaged in 383 shared service arrangements, resulting in £357 million of efficiency savings. Around 95 per cent of all English councils are sharing services with other councils.

The Association has indicated that councils and other public services are increasingly looking to share senior management, considering joint venture relationships with other public sector bodies and the private sector, as well as considering was as traditionally thought of as back office arrangements (transactional, operational or professional).

Shared Services with Local Governments in Qld

To date in Qld only Ipswich City Council has an established shared service partnership with the private sector, Services Qld has been operating for nearly 10 years and will be shortly considering an extension to the contract.

Propel Partnerships has been in discussion with a number of Councils over the last 5 years or more, but in recent times significant discussions have been undertaken with Cairns, Mackay and Rockhampton Regional Councils. It is considered that the discussions with Cairns are the furthest progressed then with the other Councils. These discussions have been along the lines of replicating a similar arrangement to the Ipswich model somewhere else in Qld.

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Shared services between Councils without the involvement of a private partner have occurred in Local Government in Qld, but are usually a one off fee for service, or possibly governed by a Board or Trust arrangement under the Local Government Act. Prior to the 2008 amalgamations a number of Councils were working in partnership to progress with such arrangements to justify the retention of then existing Councils.

Shared Services Options

There are three forms of the shared services model that have been identified:1. Outsourcing to a third party.2. Services shared between Councils.3. Partnership with a third party where the risk and rewards are shared.

THE STUDY TOUR

Harrow Council-Monday 7th April

In September 2005, Harrow Council entered into a partnership with Capita to transform the way it delivers services to its residents. This arrangement was an example of outsourcing to a third party. Council went to the market to find a firm who could for a fixed fee deliver improvements in services.

It was demonstrated in Harrow that UK Councils are seeking to reduce the personal direct contact by the community with Council staff and move as much of the interaction to on line services.

Council had undertaken an evaluation of the costs of its transaction and had determined that the cost to deliver many services was reduced from many ten of pounds using face to face interaction to only a few pence for on line transactions.

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Harrow Clicks was a campaign to educate residents about the many services they can access online. It is essential that a strong communication plan is undertaken with any major initiative to try and change or influence the way the community interacts with Council.

Another initiative considered necessary to make the switch to more online transactions was “My Harrow”.

“My Harrow” is an online facility that gives residents an additional 24/7 channel through which they can transact with the Council without waiting or queuing. It allows residents to track progress on an outstanding matter without having to contact the council and repeat certain key pieces of information. It is personalised, interactive and secure, with unique user identification. There are 90,000 properties in Harrow, My Harrow has 58,000 accounts and has 14,000 log in per month.

There were many statistics presented that reflected the success to date, some of these are:

it has increased online transactions by 133%, and saved over £200,000.new technology for waste management has reduced fuel costs by 15% and will save £3.1 million over ten years.

Northampton County Council-Tuesday April 8th

Established in October 2010, Local Government Shared Services (LGSS) is one of the UK’s largest shared services ventures of its kind and is owned by Cambridgeshire and Northamptonshire county councils in a 50/50 partnership.

They deliver a wide range of professional and transactional services to local authorities and other public sector organisations. These include Finance, IT and Legal Services.

The theme from this meeting was “by the public sector for the public sector” this was an example of Councils sharing without the involvement of a third party.

A few facts and figures:Provides HR & payroll services for greater than 42,000 people (employees and pensioners).IT services supporting 15,000+ devices (mobile phones/desktops/tablets/printers) and 10,000 plus IT end users.Property and Asset management for over £2bn of strategic assets.LGSS keeps the jobs local to its customers.

All staff were retained as employees of Councils with savings delivered through staff reduction and increases in efficiencies. Similar to Harrow the citizen facing aspects of Council business, call centre etc. was centralised, while the advisory/professional services remained close to the business.

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At the Northampton office there were two floors similar to this of call centre staff dealing with the community on a variety on themes. The operators were grouped into common themed areas that specialised in a particular council service.

According to LGSS it has delivered service improvements & efficiencies in the following ways:

• Increasing economies-of-scale for the shared benefit of all.• Look to converge/ simplify/standardise i.e. do it once I do it well.• Evolve to 'Centres of excellence' service delivery model – eliminate

duplication, improves skills, better leverage and award winning capabilities.• Creating a greater 'customer focus' culture.• Offering greater service resilience.• Opportunities for sharing customer investments.• Leveraging best practice across all of our customers e.g. Self-service, e-

Channels etc.

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Bromley Shared Service Centre- Wednesday April 9th

The Bromley Service Centre was a Capita business location for the delivery of many call centre functions. This was a good example of the conditions and arrangement of a major call centre servicing at least 12 Councils across mainly business; rates and tax matters.

Capita had won an early contract (1993) with London Borough of Bromley and established a base in Bromley. Contracts subsequently awarded (Westminster & Lambeth) which relocated to BromleyBenefits of the Centre are quite obvious, given the length of time that it has been established.

Reduced Cost of Administration.

Reduced management overhead.

Economies of scale through combined processing.

Savings through offering an "end to end" solution.

Majority of contracts on the same IT Platform.

Improved call processing via Coventry Contact Centre.

Staffing

Most staff on Capita Contracts with a small number having stayed on their original Council terms and conditions (TUPE'D).

There are 252 staff; broken down into the following areas of responsibility:

91 Council Tax.

95 Business Rates.

66 Technical Support.

The volumes of transactions handled through the call centre are represented by just two of many statistics.

Council Tax -244,946 accounts/ £212,145,562 pa.Technical team manage annual billing for Council Tax: 1, 876,125 accounts/ £2,013,362,237 pa.

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An example of a notice board with the reporting of key indicators for various Councils.

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Southampton City Council- Thursday April 10th

In 2007 Capita began a 10 year contract to deliver Southampton City Council's customer services, IT, property, revenues and benefits, HR, payroll and procurement activities, through an outsourcing agreement.

Initially there was tension in the arrangements, however with a change in leadership the contract was stabilised and has grown and improved. Again the message or theme was to make the channel shift in customer service and make everything “digital first”.

The contract with Capita required it to reduce overall costs and to invest in infrastructure and to meet greatly enhanced performance standards. The Council invested in a new civic precinct with Capita playing a major role in being a tenant in one of the buildings. This occupancy is expanding not decreasing.

The council's decision to outsource was clearly justified:

Staff were transferred across to Capita and there has been minimal attrition and sickness rates show that the 650 staff are satisfied.

Staff numbers have been increasing new services have been introduced.

positive union relationships due to open communication.

over 120 KPI’s monitored each month. Low failure rates 1-2% per month.

residents' satisfaction has improved.

the proportion of one-stop shop customers seen within 10 minutes has more than doubled to 84%.

the proportion of callers waiting over 30 seconds for the phone to be answered has dropped from nearly 50% to below 20%.

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Tri-borough Shared Service Project- London Friday April 11th

The three councils, being the London Borough of Westminster, the London Borough of Hammersmith and Fulham and the London Borough of Kensington and Chelsea agreed to implement proposals to improve services and save £33 million by 2015.

This would see the councils share two-thirds of the authorities' business, and involve 1,500 staff and budgets of around £300million.

The services that were included were children's services, environment services and Adult Social Care departments and some parts of corporate services and libraries services.

Parks maintenance was also outsourced.

Each borough became the headquarters for one of the major services shared.

The positives to be identified under this arrangement included:

Fewer senior managers; responsibility over wider area; increasing span of control; the existence of “Lilliputian Entities” that could be removed.

Joint procurement, eg insurance. There was a degree of convergency and soverninty

There were learnings from each Council and one another and the best practice from either was most times adopted.

Some of the negatives included,

there was impact on time to serve three councils and councillors.

There were different pay & conditions between the Councils, in an age of austerity it was a matter of the staff having to lump it and “be thank full you have a job”

There were some IT software issues as well.

Each council retained sovereignty over services and members and was able to specify delivery on a single council basis. Financial benefits realised to date improved services and savings of £33 million are expected by 2015. £1 million has been saved so far through the sharing of a number of director posts. Combining IT services are set to save further £2 million.

Future opportunities are being looked at to include environment and transport, as bi-borough services; Planning and additional corporate services.

A major key to its success has been the leadership across the political and administration areas.

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This session finished with a general discussion led by Sir Merrick Cockell, LGA President. Sir Merrick had attended the last LGAQ conference in Cairns.

Conclusion

The study tour was beneficial from the point of view of gaining a closer and better understanding of the various shared service models.

Outsourcing

Good scope and brief on the business elements to be outsourced

There must be strong contract management

You can’t outsource a problem

Prior to commencing this model, take the 20-30% savings out of the Council before handing it over to the contract, and then ask for a further level of savings.

Services shared between Councils

Commitment at Councillor and Administrative levels

Clear understanding of political masters

What will be the status of staff from different Councils

Services delivered through the Service Centres maintained specialist skills

Partnership with a third party

Includes elements from all of the above

From a broader Local Government perspective an overall message from the UK is that Councils are moving their business to an on line experience and reducing direct customer contact for administrative and high volume activities.

Documents

ORDINARY MEETING 28 MAY 2014...2014/05/28 · Presently, Council is tracking favourably to budget and expect to exceed the year end outcomes forecast in the Fourth Budget Review