Part 3: Performance audits and other work - 2017/18

Annual Plan 2017/18.

Figure 3 provides brief descriptions of the performance audits and other work we will carry out in 2017/18.

Figure 3
Outline of performance audits and other work in 2017/18

Water theme
1. Scene-setting report

Roles and responsibilities for water management are spread across central and local government entities that carry out a range of functions on behalf of all New Zealanders. Public entities often have to balance multiple, and at times competing, objectives when carrying out these functions.

Our scene-setting report will act as a foundation for our work. The report will set out our view of the key water management challenges from a public management and accountability perspective, the rationale for our water-themed work programme, and what broad issues we expect to emerge from our work. It will also provide an overview of water management roles and responsibilities to help the public to better understand how the public sector manages water in New Zealand.
Drinking water
2. Security of drinking water supply sources

We are interested in how local authorities are managing security of drinking water supply sources to ensure that there is enough safe and reliable drinking water now and in the future.

This performance audit will consider the roles and responsibilities for the protection of drinking water supply sources and the management of risks of contamination of water supplies. We will particularly focus on how effectively local authorities are carrying out their roles under the Resource Management Act 1991 to meet the requirements of the National Environmental Standard for Sources of Human Drinking Water. This will include looking at their plan-making, compliance, monitoring and enforcement, and consent application processing. We are also interested in identifying any best practice examples.

3. Optimising demand for and supply of drinking water

Local authorities use a variety of tools and methods to balance the demand for, and the supply of, drinking water. Climate change and changing demographics will have an increasing influence on how local authorities achieve this balance, along with the need to deliver water supply services in a financially sustainable manner.

In 2010, we reported on how well local authorities were planning to meet the forecast demand for drinking water. Our report was based on a performance audit of eight local authorities. We followed up this work in 2012, looking at the progress those local authorities had made in acting on the recommendations in our 2010 report. We found that the key challenge was in providing security of supply into the future.

We will revisit what local authorities are doing to ensure access to a safe drinking water supply in the future, building on our 2010 and 2012 work. We are interested in how local authorities determine an optimal package of methods and tools to manage demand and ensure adequacy of drinking water supply on a financially sustainable basis, now and in the future. This will include consideration of the transparency of the decision-making process, including the role of elected members.
4. Progress on freshwater quality management since 2011

In 2011, we published a performance audit report on how four regional councils (Taranaki, Waikato, Manawatu-Wanganui, and Southland) were managing the effects of land use on freshwater quality in their regions. We found reason to be concerned about freshwater quality in some regions, particularly lowland areas used mainly for farming. We made specific recommendations to each of the four councils. We also made general recommendations to all regional councils and unitary authorities, and to the Ministry for the Environment.

Since our 2011 audit, all regional councils have been implementing the National Policy Statement for Freshwater Management. This provides central government direction on how local authorities should carry out their responsibilities for managing freshwater under the Resource Management Act 1991.

We will carry out a performance audit on the progress that the four selected regional councils have made on freshwater quality management since 2011. We will examine:
  • the four councils' responses to the recommendations in our 2011 report;
  • whether the systems they have in place, or have planned, will result in any significant improvements to freshwater quality;
  • how they are implementing the National Policy Statement for Freshwater Management; and
  • the costs of improving freshwater quality, and how the four councils engage with their communities about those costs.
We will also look at:
  • compliance with, monitoring of, and enforcement of consent conditions; and
  • other responses to our 2011 recommendations by regional councils, unitary authorities, and the Ministry for the Environment.

5. Spending on clean-up of significant water bodies

Part of the Government's approach to seeking long-term improvements to freshwater quality is to provide funding to recover and improve water quality in significant water bodies. Since 2000, several hundreds of millions of dollars of Crown funds have been spent on such initiatives. Significant water bodies – such as Lake Taupo, the Rotorua lakes, and the Waikato River – have benefited from these funding arrangements. In some cases, other public entities, such as local authorities, also fund these projects or administer funding received. Some of these funding arrangements are long-term commitments, as improvements to water quality can take considerable time.

During the next ten years, the Crown proposes to invest a further $100 million for water quality projects through a Freshwater Improvement Fund to be administered by the Ministry for the Environment (the Ministry).

We will carry out a performance audit on how the Ministry selects and monitors the performance of the organisations that it funds to improve and recover water quality. This will include providers, and parties that receive Ministry funding and then fund providers. We propose to look at how the Ministry has done this in the past, and how the Ministry will do this for the Freshwater Improvement Fund. Our interest is also in whether Crown funding delivers measurable and sustainable improvements in water quality at a reasonable cost, including for projects where Crown funding is coming to an end.

This work will be relevant to other public entities that administer funding for projects with long-term outcomes.

6. Managing water: Monitoring its use for irrigation

Irrigation is the second largest use of water in New Zealand after hydroelectric power. Although irrigation is estimated to produce significant economic benefits for New Zealand, there is public debate about the benefits and effects of irrigation on the environment, including debate about how much water is being used for irrigation.

We intend to provide assurance about water metering, monitoring, and compliance, and to identify good practices and improvements in the management of water relating to local authorities and irrigation.

We will carry out a performance audit on local authorities and the administration of the Resource Management (Measurement and Reporting of Water Takes) Regulations 2010. Among other things, we intend to look at:
  • how well the regulations, in the context of irrigation, have been implemented by local authorities;
  • the effectiveness of the monitoring of water used by irrigators and compliance with consented conditions; and
  • how well the information produced through metering is used to improve water management.
Because of New Zealand's diverse geography and climate, the audit will likely include a number of different regional authorities, land, and water use patterns.
7. Management of stormwater networks to reduce the effect of flooding

Flooding is New Zealand's most frequent natural hazard. There are significant economic, environmental, and social costs from flooding. Climate change and increasing urbanisation are making flood risk worse.

Stormwater networks are key to managing flood risk. Local authorities are responsible for managing stormwater networks that channel excess rainwater away from where people and property are located.

We are interested in understanding how local authorities work with their communities to identify what level of flood protection they are prepared to pay for in the management of their stormwater networks. We intend to consider how well local authorities understand their flood risk exposure, their capability to address future flood risk, and how they make decisions about what to invest in stormwater network management.
8. How effective are the processes used to consider marine reserve proposals?

The objective of New Zealand's Marine Protected Areas (MPA) policy is to protect marine biodiversity. Marine reserves that represent New Zealand's marine habitats and ecosystems are an important part of the MPA network.

Proposals for marine reserves often raise contentious issues. Decision-makers for designating marine reserves have to consider the various values, rights, and perspectives on access to, and the use of, a body of water and its resources.

We will carry out a performance audit that will focus on the Department of Conservation and examine the decision-making processes that consider whether to designate marine reserve status for a body of water.

9. Marine spatial planning for the Hauraki Gulf

Any activity that takes place in the public water space can occur only in a planning and allocation framework that balances and respects other uses of that space. This applies to aquaculture, fisheries, marine protected areas, and other activities in the coastal marine environment.

We will examine how one multi-sector group is trying to balance competing water issues through taking a place-based approach to addressing the pressures on an area of national significance. We intend to focus on the Hauraki Gulf Marine Park, where the Ministry for Primary Industries and the Department of Conservation, along with Auckland Council, Waikato Regional Council, the Hauraki Gulf Forum, and other stakeholders are attempting to balance environmental, recreational, social, cultural, and economic objectives through the Hauraki Gulf Marine Spatial Plan.
Multi-year topics
10. Auckland Council – Review of service performance

Section 104 of the Local Government (Auckland Council) Act 2009 requires that "The Auditor-General must, from time to time, review the service performance of the Council and each of its council-controlled organisations." Although some of our reports cover the quality of services provided by various public entities, a specific legislative requirement to audit service performance is unique to the governing legislation for Auckland Council.

In previous years, we have examined:
  • Watercare Services Limited;
  • how Auckland Council deals with building consents;
  • how Auckland Council deals with complaints; and
  • aspects of the Auckland Manukau Eastern Transport Initiative.

11. Review of the Defence Major Projects Report 2017

Since 2010, the Ministry of Defence and the New Zealand Defence Force have produced a major projects report annually, setting out the status of management of major defence acquisitions. The Auditor-General has reviewed these reports to provide independent assurance about the information that they are based on. After our review of the Defence Major Projects 2017 in 2017/18, we will move to a biennial cycle of carrying out these reviews.

12. Response of the New Zealand Police to the Commission of Inquiry into Police Conduct: Final monitoring report

As recommended by the Commission of Inquiry into Police Conduct in March 2007, the Government invited the Auditor-General to monitor over a period of 10 years the response of the Police to the Commission's recommendations. We will complete a final monitoring report in 2017/18. That report will be the fifth monitoring report that we have published and will build on our previous monitoring reports. In our fourth monitoring report, published in February 2015, we noted that our last monitoring report will look at how the Police are demonstrating that they are living up to the high standards expected of them.

13. Inland Revenue Department Business Transformation

The Inland Revenue Department (IRD) is concluding Stage I of its 8-10 year Business Transformation programme and has begun work on Stage II. The programme is significant both because of the large amount of public funds committed and because it is critical to the IRD's core function to collect Crown revenue. As part of reporting from time to time on aspects of the programme over its duration, we have already published one report in April 2015. For this next piece of work, we will examine how the IRD contracted services to support the Business Transformation programme. This will include software procurement and other services provided by third parties, and the subsequent management of those contracts for services.