Speaker A
Meeting open. Welcome, everybody. Um, so, uh, we'll start with the apologies and I guess we have Hazel. Everyone else seems to be here, I think. So, could I have a mover, please?
Waipā District Council Finance & Corporate Committee discusses COVID-19 impacts on tourism, financial performance, and strategic projects.
Ask about this video. Answers come from its transcript only — with the timestamp, so you can check them.
Generated from the transcript and can be wrong — check the timestamp.
Key Takeaways
- COVID-19 has severely impacted Waikato's tourism sector with job losses and business closures.
- Visitor expenditure and international arrivals have dropped sharply due to travel restrictions.
- Wage subsidies and temporary closures are helping some businesses survive the downturn.
- Airline connectivity is focused on domestic routes with international recovery expected to take years.
- Council is actively supporting tourism through welfare, repurposing services, and strategic planning.
What the video covers
- Meeting opened with apologies and confirmation of minutes from the previous meeting.
- Discussion on the impact of COVID-19 on tourism, including significant job losses and business closures in the Waikato District.
- Review of visitor expenditure trends showing a sharp decline due to international travel restrictions.
- Temporary and permanent closures of tourism businesses were highlighted, with some accessing wage subsidies.
- Airline connectivity challenges were discussed, with a focus on domestic flights and a slow international recovery.
- Council's ongoing support for tourism businesses includes welfare support and repurposing of tourism operators for essential services.
- Financial performance for the six months ending December 2019 was reviewed, with strategic projects planned for advancement.
- Issues such as air traffic control reviews and investigations related to Whakaari White Island were noted.
- The committee discussed the need for incremental restart strategies for tourism and transport sectors.
- Future plans include monitoring health and safety indicators and continuing financial diligence.
Chapters
- 00:00Meeting Opening and Apologies
- 03:48Late Items and Meeting Order Confirmation
- 08:46Minutes Confirmation and Attendance Issues
- 17:56Tourism Sector Impact Due to COVID-19
- 25:38Visitor Expenditure and Business Closures
- 34:21Support Measures and Wage Subsidies
- 45:21Airline Connectivity and Transport Challenges
- 53:31Financial Performance and Strategic Projects
- 58:35Health and Safety Monitoring and Future Planning
Full Transcript — Download SRT & Markdown
Speaker A
um I have to leave the meeting at 1:30 to attend a future-proof meeting. So, sorry about that. So, my apologies from then. Good as gold. Thanks, Jim.
Speaker A
Andrew, just before you did, just before you do, um, I have to leave the meeting at 1:30 to attend a future-proof meeting. So, sorry about that. So, my apologies from then.
Speaker A
Would someone like to move, please? Happy to move, Mike. Thanks, Lou. Thanks, Susan. All in favor?
Speaker A
Good as gold. Thanks, Jim.
Speaker A
Any late items? No late items. So, confirmation of order of meeting. Um no changes, Ken?
Speaker A
Uh, so, we might, so, we include that in the, in the, um, in the motion, as well.
Speaker A
Um but they are well aware of the time. So, um yes, I'm hoping they'll they'll be here at the the required time.
Speaker A
Would someone like to move, please?
Speaker A
All in favor, please say aye. Aye. Contrary, no. Carried. Okay, item six, which is confirmation of the minutes from 18 February.
Speaker A
Happy to move, Mike.
Speaker A
Andrew, um Graham speaking. Um my diary showing me that I was at that meeting, but my name's not recorded there.
Speaker A
Thanks, Lou. Thanks, Susan. All in favor?
Speaker A
Mistake. Thanks, Bruce. Okay. So, I'm sure we can have that remedied, Sam. Yes, I'll just confirm Yes, we will make the changes. Thank you. Okay, so with that change, could I have a mover for the minutes to be
Speaker A
Aye.
Speaker A
All in favor, please say aye. Aye. Contrary, no. Carried. Thank you. Item seven. Jason, has Jason joined us?
Speaker A
Contrary, no.
Speaker A
Great. The floor is yours. Okay. Sam, I don't think we had we had issues with trying to get the presentation. Is that right? Oh, no, Sam is sharing. Brilliant.
Speaker A
It's carried. Disclosure of members' interests. Do we have any today?
Speaker A
So, um a report has obviously been provided to you and prepared, which was our last 6 months' performance at the end of 31st December 2019. Um as you would have seen, Waikato District Council was going through significant growth, pretty one of the
Speaker A
No.
Speaker A
Um but we are here today to discuss just the obviously a bit of a change in the dynamic given COVID and the impact for tourism, particularly as a sector.
Speaker A
Well, move on to item four, late items.
Speaker A
also from the airlines. Sort of no surprise, obviously, since COVID lockdown and international travel restrictions were put in place. Um international visitor arrivals into New Zealand has been have been dropping at a at a very sharp rate. Um we still do
Speaker A
Any late items?
Speaker A
well. Next slide, Sam. Thanks. Um so, weekly card transactions, again, no surprise, obviously. Overall, our visitor expenditure is down significantly. Um but when you do look onto the list, top five, um obviously, food, liquor, and pharmacies, we are
Speaker A
No late items.
Speaker A
So, the impact for us um as a sector, again, look, I mean, every all of this has been reported. Um but just to cover off in summary, we were already impacted through the loss of China group travel, which started in the second-to-last week
Speaker A
So, confirmation of order of meeting. Um, no changes, Ken?
Speaker A
fourth-largest international visitor market behind Australia, North America, and UK Europe. Um it it did shut us down um pretty much once international travel restrictions hit us.
Speaker A
Uh, no, I don't see, um, any need for, for change. We, we do have a number of, um, guests joining us at the meeting today.
Speaker A
of Aratiatia Rapids in Lake Taupo, um are key event platforms for Waikato District. We have had significant job losses and business closures across tourism. Um I have down underneath that last bullet points, look, the immediate business impact that we have been coaching our
Speaker A
Um, but they are well aware of the time. So, um, yes, I'm hoping they'll, they'll be here at the, the required time.
Speaker A
potentially never closed before, we've suggested they go into hibernation. Um and so, that's what we're calling temporary seasonal closures. We've had a number of businesses, you know, Hobbiton was obviously one of the most public ones um reported in the media. But
Speaker A
Great.
Speaker A
for Waikato, anyway. And then uh the last obviously uh implication for us is we have had a number of businesses who are permanently closing. Um not only have are these a loss definitely to the tourism industry to try and bring people
Speaker A
Happy to move, Andrew.
Speaker A
Uh thanks, Sam. Can I ask a question about that? Sure. Have you got examples of what businesses are struggling and like what what who isn't closing? Like who is closing and and how it is impacting around the Waikato District?
Speaker A
Graham.
Speaker A
Um they're calling it temporary closure, but they some of them have been able to access the wage subsidy, which is great.
Speaker A
Thanks, Graham. A seconder?
Speaker A
I think that's all sectors, not just tourism, around potentially extending the wage subsidy for 20 weeks cuz it will take a lot to restart um the tourism sector again. People's propensity to travel is quite low. We will travel locally, and potentially, we
Speaker A
I'll second, Susan.
Speaker A
Great. Um so, look, lastly, look, I mean, nothing no surprise here. This was just something we do for industries, people know where we all fit. So, from the tourism perspective, when we respond, obviously, we're providing the industry support right now at a national
Speaker A
Thanks, Susan, I think it was. Cheers.
Speaker A
business and community support side for tourism businesses. And then lastly, we're obviously partnered with the civil defense network around providing welfare support. Um not just for tourism operators, again, it's also been utilizing tourism operators. Many of our caterers have now been um repurposed
Speaker A
All in favor, please say aye.
Speaker A
Um we also have a number of our transport operators in tourism being um basically requisitioned now to provide transport options and actually getting people around, such as essential workers. Um and many of the staff potentially we're being redeploying um
Speaker A
Aye.
Speaker A
Thanks Sam. Um even though we're obviously dealing with COVID, this is just for you to be aware, there are obviously continuing issues that that were going on with um with COVID um, and with the tourism industry. First up was domestic airline
Speaker A
Contrary, no.
Speaker A
Um, they're going to focus very much on what we call an incremental restart. So, that's doing a width and breadth strategy across the country. So, potentially maybe only two or three flights into Hamilton per day. But again, it's to try and get
Speaker A
Carried.
Speaker A
Um, airline connectivity internationally is still continuing. So, those are just some a summary of some of the ones that are still flying. So, looking New Zealand are still connecting um into North America and Hong Kong, into Australia, Fiji Airlines are still
Speaker A
Okay, item six, which is confirmation of the minutes from 18 February.
Speaker A
Um, for future again, Air New Zealand is saying they will be focusing very much on the domestic market first. They will traditionally be a domestic airline for the first 6 to 12 months. And domestic also includes Australia and the Pacific.
Speaker A
Um, have we all, I'll take those as being read. Um, anything raised from those minutes?
Speaker A
flying into New Zealand again. Now, the reason why I just raised international airline connectivity is because um it will take this country at least two to five years before we ever go back to the type of connectivity we've had as a country um previously
Speaker A
Andrew, um, Graham speaking. Um, my diary showing me that I was at that meeting, but my name's not recorded there.
Speaker A
Uh, air traffic control services are up for review. The reason why I just put that in there is just to let everyone know um there was no Waikato airports or or airfields, but particularly Hamilton Airport is unaffected. But for us in the
Speaker A
Right.
Speaker A
unfortunately for Rotorua, it's our loss that could be our gain. And then lastly, we've still got the investigation underway around Whakaari White Island. So, the work safe investigation should be coming to a close shortly. Um, there will be impacts
Speaker A
I was going to, I was going to bring that up, too. So, yeah, I think it's a mistake.
Speaker A
Thanks Sam. Um, just some events dates so you're obviously aware now. Um, Fieldays is going online. So, from the 30th of June for two weeks, Fieldays will be providing a virtual exhibition space um very similar to other international events who offer this type
Speaker A
Mistake.
Speaker A
host New Zealand Tourism Awards in November. That has been postponed until next year. So, we will reset the date for that.
Speaker A
Thanks, Bruce.
Speaker A
until maybe June next year. So, it's just awaiting on a date for that. Um, two major convention centers were due to open this year. Te Pae in Christchurch, which potentially is the one that will be taking a lot of
Speaker A
Okay. So, I'm sure we can have that remedied, Sam.
Speaker A
claims. So again, by having these two convention centers not operating means that places like Claudelands um and the Mystery Creek Event Centre are going to be filling the gap um for national and international conferences for the short term, which is actually a good
Speaker A
Yes, I'll just confirm. Yes, we will make the changes. Thank you.
Speaker A
we also have our first major event for the region um the ICC Women's Cricket World Cup scheduled for the 8th of February.
Speaker A
Okay, so with that change, could I have a mover for the minutes to be received as a true and correct record, please?
Speaker A
Um, otherwise, they will have to go into if it does continue into isolation until the Cricket World Cup can be held. So, um what we have seen particularly for other parts of the sector is that events have been more postponed um for Waipa
Speaker A
Thank you, Marcus.
Speaker A
Next slide, Sam. Thanks. So, our response is we have a what we call a three-tiered response plan. Obviously, this is no similar to everyone else right now. We have a mitigate um process which we're currently in now. We then have a restart
Speaker A
Seconder?
Speaker A
We obviously had in face-to-face briefings across all the sector long before the shutdown. Um, and now we've moved to the virtual space. We're still doing advocacy at a national level to try and make sure we can access more
Speaker A
I'll second it.
Speaker A
that's quite the pointy end of town we call it for most of our region for our big employers. Again, wage subsidy okay, but if outside of that, there's actually no large industry support. So, we've pushing that through government to try
Speaker A
Thanks, Bruce.
Speaker A
access business advice um and some of the wage support. We've been doing webinars. And we've now moved in the last two weeks into workforce redeployment. So, again, we've been um taking some organizations or employers that have maybe at least five
Speaker A
All in favor, please say aye.
Speaker A
industry, which will be the next um seasonal workforce will be will be standing up until the end of the year.
Speaker A
Aye.
Speaker A
But again, what we are going to see over the next two weeks, we're starting to measure that, is the full impact of people that we cannot redeploy um that potentially will be out of work.
Speaker A
Contrary, no.
Speaker A
Thanks Sam. Under the restart phase, so again, um we want to congratulate local government because obviously um getting some of those shovel-ready projects um through with the Crown Infrastructure Partners for their consideration is a great win for the region, but
Speaker A
Carried.
Speaker A
research, um we were already in market and about to finish up our domestic perceptions and major research. This is now becoming quite timely for us and will help us inform around how we will try and bring back um the domestic
Speaker A
Thank you. Item seven. Jason, has Jason joined us?
Speaker A
ready to go, we can push go on that. We do see events and business events and corporate travel as being um the kick-starter we need for economic and social recovery across the region.
Speaker A
He has. I see him, Sam nodding.
Speaker A
Hidden Lake obviously one of your newest hotels in Cambridge only opened on Christmas Eve. So, Glenda and the team we've been keeping in touch with quite a lot because they haven't been in operation very long. Um, their impacts
Speaker A
Oh, hi, Jason. How are you doing?
Speaker A
So, again, we we're sharing that information in Te Waka. And now we're contributing to the Te Waka economic outlook as well, which is great.
Speaker A
Good, thank you.
Speaker A
Uh, so Mighty Local again um was a partnership with ourselves, Te Waka, all the chambers of commerce, so Te Kuiti um and obviously Cambridge Chamber of Commerce, plus the Waikato Chamber of Commerce, all our councils, um the business associations that also
Speaker A
Great. The floor is yours.
Speaker A
recipes from our beloved chefs, well-being and fitness. And this week we launched business stories. So again, we're starting to use this platform to promote some of the businesses and how they're pivoting into obviously response or looking at different opportunities
Speaker A
Okay. Sam, I don't think we had, we had issues with trying to get the presentation. Is that right?
Speaker A
Uh during phase two, which is obviously from alert level three, we will increase our takeaway and even be listings.
Speaker A
Oh, no, Sam is sharing.
Speaker A
At the moment, it's a regional platform. Um but the idea is potentially people will be able to to be able to group the types of information um and services available at a local community level and at a district level as well.
Speaker A
Brilliant.
Speaker A
in partnership with many communities and business associations that already have um local programs such as Cambridge with their totally locally Cambridge campaign. So we're working with Kelly and the team around how we would try and push their program um rather than this
Speaker A
Perfect. Thanks, Sam.
Speaker A
to 3 months, we'll be pushing basically localism um everything to do with obviously how how you purchase and interact with your local community. Um at phase two, which then we'll move into a 3 to 6-month bracket, we're estimating we can then
Speaker A
Um, good morning or good afternoon, sorry, everyone. Um, thanks for allowing me time just to give you a quick update on where we are as a sector for tourism and particularly for, um, Waikato District.
Speaker A
distancing. At level three, which is what we're planning our scenarios for 6 to 12 months, we can then stand up the domestic market. Um that is potentially we will mainly focus on drive. So as you've heard me say before, 2.5
Speaker A
So, um, a report has obviously been provided to you and prepared, which was our last 6 months' performance at the end of 31st December 2019.
Speaker A
which again business are quite a good lead for us with regards to um stand up the the sector again. And then lastly, we're planning on 1 to 2 years before we um actually start to see any sort of
Speaker A
Um, as you would have seen, Waikato District Council was going through significant growth, pretty one of the fastest-growing regions for us with regards to tourism, um, impact.
Speaker A
um that's the time frame we are currently doing our scenario planning for, but as we all know, it may change um every week based on the alert levels we have.
Speaker A
Um, you were experiencing double-digit growth pretty much, um, through visitor expenditure and also commercial accommodation.
Speaker A
pushing for the last 2 to 3 months with Tourism New Zealand and the Minister for Tourism around what we're calling a reimagining of tourism. Um we There was our chance that this is more than a shock, it's actually a bit of a
Speaker A
Um, but we are here today to discuss just the obviously a bit of a change in the dynamic given COVID and the impact for tourism, particularly as a sector.
Speaker A
really feeling the pressure such as Queenstown and Central Otago um and Cathedral Cove, some of our sites, Mount Tongariro. So for us now, um it's great to see the government are taking this seriously. So we're now working with Tourism New Zealand to lead
Speaker A
Um, if we can go to the next slide, Sam.
Speaker A
Um what will success look like for us for the future for a visitor market? Um how do we move our sector from boom and bust again, no different to the food and fiber sector or any other business cycle? And lastly, how do we move to a
Speaker A
Perfect.
Speaker A
And that they have the decision around what sort of tourism they want. So again, we will be moving our 2016 tourism opportunities plan, which many of you were involved in.
Speaker A
Um, so, just first a couple of slides, obviously, um, just covering off some data. We are now receiving international, um, and national data on a weekly basis from the government, um, and also from the airlines.
Speaker A
We will not be receiving the same sorts of level of tourism as we did previously.
Speaker A
Sort of no surprise, obviously, since COVID lockdown and international travel restrictions were put in place.
Speaker A
So again, it is a good opportunity for us to look at transforming the sector.
Speaker A
Um, international visitor arrivals into New Zealand have been dropping at a very sharp rate.
Speaker A
installment policies, not just for the tourism sector, but for all business. Um I it's great to see you're all continuing with your resource consent processes maybe in a more delayed way, but again, um the liquor and food licensing is going to be more important
Speaker A
Um, we still do have airline connectivity, which I will go through, um, because we are still maintaining what we call a baseline service for connections across the world, um, mainly for repatriation flights, but also for, um, cargo and service across the country, as well.
Speaker A
regional major events fund which will actually assist all the districts to be able to bid for major events again.
Speaker A
Next slide, Sam. Thanks.
Speaker A
And then lastly, um again just to thank you all for your continual funding uh to support the tourism industry. And that that will obviously be more important through restart and the reimagine phase.
Speaker A
Um, so, weekly card transactions, again, no surprise, obviously. Overall, our visitor expenditure is down significantly.
Speaker A
Um that's pretty much it from me. I think. So happy to take any questions.
Speaker A
Um, but when you do look onto the list, top five, um, obviously, food, liquor, and pharmacies, we are still seeing some cumulative and some obviously weekly growth in expenditure, um, compared to all our other, um, visitor type expenditure and transactions, as well.
Speaker A
Um yeah. And look, of course in Waipa and and probably a lot of Waikato as well um it domestic tourism is actually a lot bigger than international. So um we really want to see and and as you have in your plan that
Speaker A
Thanks, Sam.
Speaker A
Clear. Okay. Um yes, thanks a lot, Jason. And yeah, fantastic um effort I think being put in by all your team, you know, in this situation. Um couple of questions. Well, the first one was that I noticed that in the regional
Speaker A
So, the impact for us, um, as a sector, again, look, I mean, all of this has been reported.
Speaker A
Great. You said it's Well Energy. Yeah, I know that's great. Um and the the other thing is um for your reimagining, you know, the future of tourism, I saw that you had your stakeholders listed. I didn't see the Department of Conservation there.
Speaker A
Um, but just to cover off in summary, we were already impacted through the loss of China group travel, which started in the second-to-last week of January.
Speaker A
sort of around the table so that cuz I hear that, you know, they worry about the pressure points that we were experiencing. And that, you know, just having their input, you know, um might be beneficial.
Speaker A
Um, so, with that, a lot of our international-facing products, our hotels, uh, our motels, our Airbnbs, um, were immediately impacted by that because many, um, of China group travel actually did stay in the Waikato.
Speaker A
And it's only because they they both actually contributed to the national tourism Aotearoa strategy. So they're definitely part of it. We don't obviously have a lot of any national parks, but we do still have a lot of Crown estate.
Speaker A
They were our fourth-largest international visitor market behind Australia, North America, and UK Europe.
Speaker A
opportunities with DOC originally before COVID to look at developing short walks for the region um under the Great Walks mantle. So um they're some projects that we now have brought forward again to say can we'll DOC reconsider moving some of
Speaker A
Um, it did shut us down, um, pretty much once international travel restrictions hit us.
Speaker A
I guess it's just a a huge thank you, Jason, to the support you have operators. Um you know, I've been uh affected a little myself and the and the calls that I get from your team are are very encouraging. That's very That's
Speaker A
Uh, and the visitor economy covers more than just the tourism operators.
Speaker A
are reliant on a lot of the international visitors. And I guess it's lucky for us in some ways that there's not that many Waipa operators that are reliant on internationals.
Speaker A
Again, we've mentioned accommodation. It also impacts retail, hospitality, transport providers, um, our operators, of course, but also event organizers and major venues.
Speaker A
internationals cuz that's really where the biggest uh you know, issues are going to be.
Speaker A
And of course, um, Mystery Creek, of Aratiatia Rapids in Lake Taupo, um, are key event platforms for Waikato District.
Speaker A
they would be the main impact for Waikato, but you are correct look pretty much most of our events which are great and our operators pretty much talk to the domestic market and I still feel that again look the Waikato Expressway
Speaker A
We have had significant job losses and business closures across tourism.
Speaker A
the motorhome and Caravan Association they're going to be another first leader and mover back into the region as well which is fantastic so working with them and AA traveler um around trying to get more people back into Waikato. So I think again um your
Speaker A
Um, I have down underneath that last bullet points, look, the immediate business impact that we have been coaching our businesses through and helping them get through is some have gone to what we call temporary or seasonal closure.
Speaker A
Great. Okay. Thanks very much for that. You've got you've done an awful lot of work and you've got a lot more in front of you I can see.
Speaker A
So, again, we have a lot of seasonality in tourism. Many who would close for winter, um, have closed, but those that potentially never closed before, we've suggested they go into hibernation.
Speaker A
I'll move. Thanks Marcus. Thanks Claire. Um all in favor please say I. I. Contrary no carried. Thanks very much Jason. All the best. Thanks Ian.
Speaker A
Um, and so, that's what we're calling temporary seasonal closures.
Speaker A
Um but Mark from our CE Hamilton Airport um the floor of your's and just like Jason um you've had a massive change for your business so uh um yeah.
Speaker A
We've had a number of businesses, you know, Hobbiton was obviously one of the most public ones, um, reported in the media.
Speaker A
Um Hopefully you've got a presentation coming up and that should be before you now.
Speaker A
But again, um, all our motels, hotels, um, retail, hospitality have pretty much reduced service and staff.
Speaker A
um it's useful to have him here. Perhaps not quite the presentation I had intended to present a month ago uh but as we know a lot has changed and um a massive amount has changed for RWA in the in the last three or four weeks.
Speaker A
There's only essential services operating, as we know.
Speaker A
Um and uh I think what you'll see is uh how we've dealt with the crisis uh what the implications have been um for the group uh now and for the next 15 months uh and and a summary that um shed some
Speaker A
Um, but again, with alert level three, we do see some, um, opening up, um, potentially in the hospitality sector, uh, for Waikato, anyway.
Speaker A
So I guess um the first point I think is useful to um you've obviously received our uh six-month interim results.
Speaker A
And then, uh, the last obviously, uh, implication for us is we have had a number of businesses who are permanently closing.
Speaker A
performance uh under any measure um of our SOI for this this financial year. But of course and that led to our draft SOI that you've also received and uh that of course is now pretty much irrelevant and I see that you uh
Speaker A
Um, not only have these a loss definitely to the tourism industry to try and bring people back when we don't have products, um, but also particularly for those vulnerable communities where some of these operators have been going for many years.
Speaker A
there'll be some narrative change and some priority changing as well. Um we have as I say um completed a very detailed 15-month forecast through to 30 June next year.
Speaker A
Uh, thanks, Sam. Can I ask a question about that?
Speaker A
uh councils in May uh and we by that stage uh will have finalized the new drafts.
Speaker A
Sure.
Speaker A
business but if I divide it into these four areas that are before you of course the first uh is the aeronautical business um in New Zealand complete as you know suspension of flights.
Speaker A
Have you got examples of what businesses are struggling and like what, what, who isn't closing? Like who is closing and how it is impacting around the Waikato District?
Speaker A
Uh and uh along with our general aviation L3 Harris the flight school basically you know 97 98% loss of our aeronautical income overnight.
Speaker A
Yeah, so particularly for Waikato, it has mainly been, um, your hospitality, potentially some of your retail, and also, um, accommodation.
Speaker A
overnight um impact on our tenancies. We're quite a large landlord as you know and um but today and Scott will talk a wee bit about this but today we've had good support um from our tenants um but we're
Speaker A
So, we have had many, um, nearly all of your accommodation has pretty much gone into hibernation or closure.
Speaker A
Um we've obviously suspended the terminal um upgrade work and I'll talk to that a bit further on uh which of course was a major piece of work approximately $15 million of of proposed work.
Speaker A
Um, they're calling it temporary closure, but some of them have been able to access the wage subsidy, which is great.
Speaker A
isolation facility. It wasn't required it was a backup to the Auckland hotels. Um nonetheless we have received um and we are receiving payment for the use of the hotel by the government uh but that ends uh really this week and from then
Speaker A
Um, but again, what we're going to see is the impacts are longer than the 12-week, uh, wage subsidy right now.
Speaker A
course the cafe and store staff um are uh are at home unable to work and part of the government subsidy. Our rescue fire team does remain on site uh at this point.
Speaker A
So, it's post-12 weeks is what we're quite concerned about.
Speaker A
First of all we we uh very quickly leading into um uh probably uh two weeks before we moved into uh level two and level three or before we even knew what that meant uh we had worked very closely with the
Speaker A
Um, we have been lobbying nationally the government, and I think that's all sectors, not just tourism, around potentially extending the wage subsidy for 20 weeks because it will take a lot to restart, um, the tourism sector again.
Speaker A
also saw the writing on the wall uh on the on the wall for our own business.
Speaker A
People's propensity to travel is quite low.
Speaker A
Um we've uh completed significant cost reductions in the business that's right across the business so that's um major cost reductions in our expense lines uh reductions uh pretty much across our business in terms of payroll uh anything up to a 20% reduction and
Speaker A
We will travel locally, and potentially, we will travel, uh, intra-regionally, so staying within the region, but, um, to try and stand up the domestic travel market is going to be a long haul.
Speaker A
Um and uh with the hotel uh we worked through and are still working through with Jet Park um uh but they've gone through a full restructuring exercise.
Speaker A
That we're looking at a 6-to-12-month recovery plan for that.
Speaker A
The Airport Association that we're part of is doing a major piece of work uh with central government to try and see what uh support if any there are for airport companies that have been significantly hurt as you know we are we
Speaker A
Great.
Speaker A
Already covered the people we can move to the next slide. Um the scenario modeling uh that I talked about there, um I think the point that I would that I'll make here and come back to at the end is that um
Speaker A
Um, so, look, lastly, look, I mean, nothing, no surprise here. This was just something we do for industries, people know where we all fit.
Speaker A
myself and my team, uh we've we have, as you know, diversified the airport company. Uh and that is, I guess, bought us time. So, we have completed um a very conservative um model for argument's sake. It It assumes no Air New Zealand
Speaker A
So, from the tourism perspect...
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positive EBITDA really. So, what is and we've also taken a very conservative view of um our uh leases of our lessees ability to pay us, etc. No activity out of the hotel really uh for the balance of this
Speaker A
calendar year. Uh so, very very uh conservative but realistic modeling. Fortunately, we have a major land sale that is unconditional and uh very extremely good um uh family uh significant family multinational business that have agreed uh to further provide a letter of credit
Speaker A
to the airport company, which gives me confidence to to build the road, so to speak. So, um that delivers about 2 and 1/2 million dollars of uh of margin of uh free cash flow into the group early next year.
Speaker A
So, the reality is that we can get through this year and through to June 21 um almost a slightly positive cash position. The balance sheet's taken a bit of a hit, and Scott will take you through that, but um
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uh and also we have some work going on on central precinct, and again we have the ability, hopefully, to settle some unconditional land sales with the same degree of confidence around further sureties, which will also feed some additional cash into the group.
Speaker A
Um we've only utilized about 65% of our of our um debt funding, and in fact, we have further facilities that we were intending to take anyway pre-COVID, and we will still take, which will take our funding up to about 30 million.
Speaker A
Uh and uh then we will have only utilized not much more than 50% of that by June next year. So, most um most of the um cash burn is is funded out of um out of our overdraft during this period,
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and then the land sales um kick back in uh and we're back in positive uh space.
Speaker A
BNZ very supportive um and uh no no issues there around funding. Next slide, please.
Speaker A
So, we have joined with um Hamilton City and um and I have spoken to uh Gary Dykes and others um around the obviously the Crown Infrastructure projects. We have put forward two applications. If you've had a chance to
Speaker A
to review um the submission, um she might would be aware there are 23 projects. We have submitted for the terminal redevelopment. Um and also for an amalgam of a number of projects around the airport that deal with roading, lateral infrastructure, our
Speaker A
wastewater plant, um uh and um various other um aspects that again is also worth about 11 million dollars. So, we have um put those in.
Speaker A
Uh Whether we're successful, who knows, but under the terminal redevelopment project, we're ready to go. Tenders have been received and and were being evaluated the week of lockdown. Um our consent is in with what in with your council at the moment, and that's um
Speaker A
well that was well underway. So, it is a shovel-ready project. Um we could be out of the ground um and doing enabling works within a month of uh a funding line. The key for myself and the board will be uh what are the
Speaker A
tags that the government um apply if we are successful to the funding mechanism, how much of it is um is is a loan, is a grant, etc. Um but that's underway.
Speaker A
And that's part of our recovery program. So, if we go to the next slide, um been important as we worked through really the devastation of the past 3 or 4 weeks to make sure that we still keep our eye on the longer term um for the
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group and our our focus over the next 12 months. I won't spend any detailed time here other than to let you know that we have a a clear set um of a clear business plan and a a clear set of
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objectives for FY21. Um most of those remain in place. We are reviewing them currently as a management team, um but we are trying to make sure that um we continue uh property as a major contributor as you as you can see there
Speaker A
potentially just shy of 8 million dollars in land sales in this next 12-month period. Um Operations, we continue to maintain um the runway. Fortunately, in our 10-year asset management plan, we have a very quiet We've just spent close to a
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million dollars uh finishing in March of this year on uh some apron works and some pumps, uh some other bits and pieces, uh but we have a very quiet capital expenditure for aeronautical over the next 12 to 18
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months, which couldn't have come at a better time, but we maintain the assets, and you need to know that we that we uh that we will. Um when it comes to uh we'll be working very closely with Air
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New Zealand to try and obviously kick-start uh services again, and so our whole marketing and uh social media and comms strategy will be around exactly that.
Speaker A
The hotel is a much more difficult um uh beast as uh you would have gained from uh Jason's um presentation, but look um we uh we are working now closely with Jetpark to understand what a uh what a plan coming
Speaker A
out the other side may look like. Fortunately, it's a hotel uh that wasn't reliant on international tourism, but it is reliant on uh conferencing uh in particular, and uh we we yet to understand the behavior of the business
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community as we go forward in this new world. So, we have just almost uh finished spending close to 4 million on the hotel just prior to lockdown. Um so, uh it is a it's a it's a property that um
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we're going to have to uh maintain in the meantime and fund. And our conservative modeling does um uh does mean that the group can um fund its interest in the hotel uh certainly for the next 18 months with um with limited
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activity from it. And if we move now on to the next slide, which is probably uh the financial a couple of slides here on on sort of financials, and and I'll let Scott lead in now. My my our overarching comment
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here would be you had a lot of detail in the 6-month uh interim results, so we decided there was no point in replicating information you will have read. So, Scott will summarize it here and more importantly take you out the
Speaker A
other side over the next couple of years. All right, good afternoon, everyone, and thanks, Matt, for the introduction. It's um yeah, I won't dwell too much on the past cuz it's unfortunately it became largely irrelevant, but I guess just
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some key takeaways from the slide and and what you may have read already, um an interim report, but really that momentum we built in the past couple of years around a um sustainable, so recurring, revenue base through passenger growth in the airport business
Speaker A
um through our property portfolio that had continued really well for the first half of the year.
Speaker A
Um and you know, obviously without COVID-19, we expected to continue through the full year and beyond.
Speaker A
Um Yeah, just some points around property. Obviously, talking um some big numbers around land sales. I guess that they are land sales that have been contemplated um under our 10-year plan. They're land sales in the pipeline. It's not
Speaker A
something that we've done as a knee-jerk reaction um or sort of a fire sale type arrangement just to get some cash for the next couple of years.
Speaker A
These are um The land we're selling is um sort of surplus to aeronautical requirements. In fact, much of it's actually physically separated from the airport through a gully system, so we're not compromising any core asset sort of um
Speaker A
future capability by selling this land. Um very much as um land that's surplus to the airport, so that's why it's being sold off um time it has been.
Speaker A
Um yeah, just with the hotel, obviously it is a new investment for us, a new industry we've invested in. Um really pleased with the early trading performance. Um, yeah, and probably pleasing that we didn't other than the initial money to
Speaker A
do the property up. Um, a team just in the third maintenance and things, it's actually traded cash flow positive. It's nice being profitable with depreciation and things, but um, but we're actually able to repay some debt. And you know, that's the early
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vital signs and occupancy and room rate have been have been certainly in line with the expectation.
Speaker A
And again, kind of right up until February, March, it was really just coming into its stride the conference center and the food and beverage offerings. So, yeah, um, I think you know, it was um, you know, it was looking really
Speaker A
positive. Um, and hopefully the the other side that's the momentum we can um, we can leverage off again. So, probably just look um, look to the future and just move to the next slide.
Speaker A
Um please. Yeah, so I've given here just sort of um, in six-month increments, um, the remainder of the financial year, um, or sorry, the financial year that that we're in and then the following three that are presented in the draft
Speaker A
statement of the 10-year proceed. I think important to focus on EBITDA because that's sort of a cash flow metric for us.
Speaker A
Um, that includes land sales, but it excludes of course costs like depreciation, which um, is around $3 million a year for us, which in the short term, um, is not necessarily linear with the with the investment we make into assets.
Speaker A
So, seeing um, obviously seeing a reasonably significant decline in the in the next um, in this calendar year with um, you know, across the business certainly going to suffer.
Speaker A
And that's um, as we see in the sort of early six months between December 20 and June next year, that's the effect of this large land sale um, taking effect.
Speaker A
And then as the business kind of gets back on its feet, um, you can see it's slightly back to cash flow positive. So, I guess you want to compare the red the red and the blue the blue bars and red
Speaker A
line and the green line is sort of where we think we're going to head now.
Speaker A
So, you can see here differently the next sort of 15 to 18 months is going to be a bit painful, um, but after that, um, pretty much back on our feet and not becoming heavily reliant on on land
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sales certainly out past the next 18 months. So, we've only assumed what's already under contract and what's unconditional will settle in those numbers.
Speaker A
So, I think that's um, they're conservative but realistic and conservative on conservative on both fronts.
Speaker A
Um, certainly the costs we're looking to remove out of the business aren't anything that's going to compromise us long term. We're not giving up capability, but um, either we've built or we've managed to hang on to it for as long as we have.
Speaker A
I think there's some um, yeah, it's definitely conservative and and look, if things don't play out the way um, we see them doing and it's certainly not as positive as um, they might do. There's some opportunities if um, further, but for
Speaker A
now it's um, this sort of is realistic that we can preserve our current capability anyway.
Speaker A
Um, yeah, I guess just to overlay the net profit slide. Um, yeah, there's a lot more um, probably that the deficits are bigger largely because of the effect of depreciation, but ultimately following a fairly similar trend to the cash flow,
Speaker A
but um, look, land sales over the next 18 months will get us um, cash flow positive. And we expect by the end of business to be largely um, cash flow positive from its recurring trading to be sustainable.
Speaker A
Um, and yeah, that that's probably I guess um, the main takeaway there. Um, and it's not really built into the slides, but just um, as Mark talked about the effect on the balance sheet, look, we expect that there will be some
Speaker A
impact to our balance sheet around property values and most of the equity movements. Um, so as a shareholder that obviously will impact your accounts as well.
Speaker A
But um, I guess out of this is a as a shareholder in a in a non-financial sense um out of all of this we're preserving our core capability. Um, we're not compromising any of our aeronautical capability.
Speaker A
Um, so I think yeah, in terms of what the service will keep delivering, um, that shouldn't be compromised or at least our ability to do it.
Speaker A
Um, that was really all I had. Just um, you know, a few other financials. So, I might be passed back to Mark to wrap up.
Speaker A
This is the last slide. Um, my apologies we've taken a bit of your time, but look, I think the key themes here really are as I opened up, we we we we um, hit this uh, situation in a very strong
Speaker A
position um, and uh, and a very strong balance sheet uh, a record year. Um, the foresight of the diversification through our 10-year group strategy um, has I think really bought um, this company time.
Speaker A
Uh, perhaps unlike some other regional airports that I think will need to go to their shareholders very uh, quickly for additional funding or through their through their bank funding lines, um, we don't need to.
Speaker A
Um, that non-revenue has been absolutely critical to to and in fact, ironically we never predicted a COVID um, uh, 19 scenario, but we did predict um, a loss of aeronautical income uh, through um, cessation of services or reduced services. So, um,
Speaker A
uh, has been one and the same. Uh, and look, um, overall um, the recovery as Scott has mentioned will be modest um, but sustainable. Um, and as I want to keep restating uh, we won't need to go to our core debt at this
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stage um, or funding lines to to to to fund this. We can fund it um, out of out of in effect the working capital. Um, and most importantly I think for you as a shareholder, there is no requirement
Speaker A
for the board to come to its shareholders for support and we don't see a scenario at all that um, that requires the shareholders to assist the airport company um, in the foreseeable future.
Speaker A
So, that's it from me. Sorry Andrew, I apologize that we're over time, but um, happy to take questions if you've got time.
Speaker A
Yeah, no, thanks guys. Um, I think we were aware that um, a bit of extra time was going to be required for you guys with uh, such a massive impact. Um, I've just got a quick question about the
Speaker A
flight school. Um, when would would they not get back to level one or possibly could they operate at level two?
Speaker A
Uh, well, in fact Scott's just had some advice today. It could well be that the pilots that are that are well through their qualification will be able to start flying under level three. So, as soon as next week we could see some flight
Speaker A
activity. Um, but it will be to your point Andrew down at level one probably.
Speaker A
But there'll be the social distancing issues when you have an instructor and a trainee pilot on board. So, I think we're we're still are unclear and so are L3 as to when that will be. Um, I think it's worth uh, noting that um,
Speaker A
we don't quite know where we're going to go with L3 in the sense that they've got a hundred about 180 pilots currently um, at the airport in in in Hamilton or out at the accommodation uh, at um, uh, at the airport.
Speaker A
So, I think we're we're fine they're fine for the next few months. The question is how whether they're going to be the logistics of moving pilots across borders for training and actually uh, pilots uh, there is not a dearth of pilots in the
Speaker A
global marketplace as a result of the catastrophe for the airlines. So, I think those two would suggest to us that um, we've got difficult times ahead post the end of 2020 with L3.
Speaker A
Yeah, that makes sense. Um, yeah, I think um, as as you've both noted, um, the stage that you're you're at with your um, property development has has been a very fortunate thing. If if this had occurred at the at the beginning of that it would
Speaker A
have been far more um, financially destructive. But does anyone else have any queries? Okay, that not being the case, look, thank you very much. A really comprehensive update and um, great to see um, you recovered from the shock and um,
Speaker A
being really positive and and constructive going forward. I say thanks very much to you both.
Speaker A
Thanks. Thank you everyone. Thanks. Thanks very much. Okay. Cheers. And I see we have Calvin.
Speaker A
Sorry, what was that? Ah, okay. So, we've got Calvin and also is Peter's available? Yes, I am. Ah, great. So, um, thanks Calvin and Peter.
Speaker A
Um, and uh, we'll let you get on to the um, shared services. Thanks Mr. Chairman and um, thanks for the opportunity to speak with you. The South and you've been provided with a copy of the company statement of intent
Speaker A
and half-yearly report to uh, 31 December 2019. And I I I'm conscious of the fact this is the first opportunity I've had uh, as the newish chair of the LES to talk to you. So, I wanted to start by just briefly
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introducing myself and then I wanted to talk a little bit about the company's transformation role.
Speaker A
How are we going to do things differently? What it means for your council? And then I want to conclude with some remarks about COVID-19. But I guess the key point is that uh, certainly from the board of LES's
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perspective, uh, the organization has never been more relevant than it will be in a post uh, COVID-19 uh, recovery period.
Speaker A
So, the first point I wanted to make is that um, my My has been heavily invested in the Waikato for a very long time. My mother's family came to this region in 1865.
Speaker A
Uh my father's family came to this region in 1880s and all my family live in the region. My mum lives in Hauraki District. My sister lives in Thames-Coromandel. I have another sister in in Hamilton, a brother in Waipa District.
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Uh and after 44 years Ange and I are leaving Auckland next week and moving to Cambridge.
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So, uh we very much look forward to becoming uh Waipa District Council ratepayers as from the 1st of May.
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So, uh as you can see, uh my family's been heavily invested in the in the success of the region and it's one of the reasons I took the job. Uh the other reason is the clarity of the opportunity
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and and I've spent 21 years in local government governance across multiple CCOs and and clarity of role is actually quite unusual.
Speaker A
In in this case, the company's vision is to have Waikato councils working together in the best way possible for the collective benefit of them and their communities, which means less burden on ratepayers, happier communities, and council staff, and more effective
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councils. So, if we as we've set out in in our statement of intent, the organization really exists to do three things.
Speaker A
First of all, to create effectiveness and efficiency gains for shareholders such as you. Secondly, to help increase the influence of the region.
Speaker A
And thirdly, to help shareholders provide a better customer experience. What LASS does is provide an opportunity to think regionally without boundaries and to then help councils use that thing locally to improve the well-being of the community. So, thinking regionally means
Speaker A
that rather than individual councils trying to solve their problems individually, LASS can help them work them out with the costs of that spread while still allowing choices to whether to implement solutions locally.
Speaker A
Uh I think that uh it's fair to say my observation would be that over the years of its existence the organization's done a good job, but I think one of the reasons that I've been hired is that there was an opportunity seen to be able
Speaker A
to uh really grasp the company's potential. So, when I was hired, the board said that it wanted to undertake a number of transformative projects at pace.
Speaker A
And for that reason, uh we are going to and are driving the organization harder and faster.
Speaker A
Um and earlier this year, the board committed to do just that. We are looking to be bolder, more disruptive to enable you to help you transform how you and other Waikato councils operate.
Speaker A
Uh we also won't be afraid of of failing and by that I mean recognizing that an opportunity's worth pursuing um as long as we do it fast.
Speaker A
Coming from the private sector, having spent 35 years in the private sector, my observation would be that uh there's nothing wrong with failing so long as you fail fast and fail cheap.
Speaker A
So, with then that in mind and and looking ahead over the next 18 months, there are really three core elements to what we're doing.
Speaker A
There are some key strategic projects which we'll be looking to advance as fast as possible and and you'll see those projects in the statement of intent.
Speaker A
Um there are some businesses usual projects and uh in addition, um I've asked for a re-examination of some of the work that we're doing to see whether we should stop doing it.
Speaker A
Um as you'll appreciate, it's it's really fundamental to perceptions of success of an organization that they seem to be making progress month by month. So, one of the things we've done is introduced a lot more careful tracking about what it
Speaker A
is that we're doing and and whether we're being successful. And we're looking to improve the communications to key council staff as well.
Speaker A
I've said to my board colleagues and you'll be aware I'm sure that the that everyone sits around the LASS board with the exception of me as a chief executive of one of them in the councils.
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I've said to my board colleagues that they are really the difference between LASS succeeding and failing that and the reason for that is that they are the ones who will dictate the resourcing and prioritization and cooperation which is accorded to LASS projects.
Speaker A
And I've made the point pretty clearly that without their total commitment, the organization will fail, but equally their success LASS's success will be their success and vice versa.
Speaker A
So, turning now to to what it means for your council, think three things. First of all, um you should consider this organization as an extension of your vision of building the future together to promote the well-being of Waipa
Speaker A
District and its people. Um we've both got a role to play in providing solutions to the high-growth region of the Waikato.
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Uh we both recognize the need to do more with less to drive costs out of local councils.
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We both want to ensure that nationally the Waikato region punches above its weight by showing that the region can provide can provide joined-up services across the region.
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And we both want to improve the well-being of the community. Indeed, it's in your vision.
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Secondly, as an organization, as I've said before, we're not limited by boundaries. We're tasked with thinking regionally to enable you to act better locally.
Speaker A
And I think the opportunities to work with you and your companion councils to achieve your aspirations are boundless regardless and possibly even more because of COVID-19.
Speaker A
Thirdly, obviously by necessity, we need resource to achieve our outcomes. And you'll see that some of the initiatives that we've proposed in the statement of intent will require some upfront investment in order to achieve some mid to long-term savings.
Speaker A
Now, I said I would uh finish with a few words on coronavirus. It won't surprise you to know that as a board we've discussed uh very early on whether we should make any substantial changes to our work program to reflect
Speaker A
what will be a new reality. What we concluded indeed was that in fact we should keep doing what we're doing because it's going to be even more important.
Speaker A
Um moreover, it's going to help rebuild the region and increase resilience. Our view is that in a post-COVID-19 period, during the recovery period, there will be need in the region for at least the following three things. First, security of public works to enable the
Speaker A
private sector to plan long-range. And I think importantly commit to training and for their staff to commit to stay in the region.
Speaker A
Secondly, a demonstration of restraint by public bodies on what might be perceived as non-essential spending. In other words, doing more with less.
Speaker A
And thirdly, motivation and encouragement and development of current council staff. Now, we're planning to deliver all of those already through our work program as set out in the statement of intent.
Speaker A
So, thank you for the opportunity to talk to you. I I obviously wish that I could have spoken with you in person, but um no doubt that opportunity will arise um sometime shortly in the future. Kelvin and I are more than happy to take any
Speaker A
questions, um Mr. Chair, but I wondered Kelvin if there is any additional points that that you wanted to make.
Speaker A
Uh no, I well covered, Peter. Thank you. Okay. Thanks very much for that. Um yeah, as as you mentioned, um LASS has been active in our in our well, between our councils for a number of years now and and been um
Speaker A
very successful um particularly with roading and the roading accord. But um what's happening now is a an absolute step change.
Speaker A
Um and I totally agree with what you said about it being more um important post-COVID uh uh rather than less.
Speaker A
So um yeah, I wish we have a success, of course. Um now, questions. I think clear yes.
Speaker A
Yeah, yes. Thanks, Andrew. Um and uh great to uh meet you via Zoom, Peter, and um it's good to see you, too, Kelvin. Um I did send through some questions, but um two two um uh ones that I'd just like to ask in
Speaker A
this forum. Um the first one is that um you know, you've made a strong case for continuing how you're going at the moment, you know, that all those things that you're focusing on will be more important than ever when we're dealing
Speaker A
in the post-COVID era, I guess. Um but a lot of the things that that are done rely on the I suppose the goodwill of councils and releasing resources for from their business to work on LASS stuff. And I I can foresee that councils are
Speaker A
actually going to be pretty hard-pressed with their own own staffing resources dealing with, you know, extra things that have come out of the woodwork to do with COVID-19. And so, what assurance can you give us that that you won't sort
Speaker A
of find yourself high and dry that that you can't get the sort of resource that you do need, you know, from the individual councils that have normally been really supportive because, you know, the the staff are just completely
Speaker A
committed, you know, to this other work? Um Kelvin, would you mind if I answer that question first and then Sure. maybe there's a a few additional points you want to make. I think, Councillor, thank you. That's a that's a great question.
Speaker A
Um the good news is we had uh I'm happy to say thought of that as well. And um one of the earliest things that we did well before lockdown was when we could see this thing coming.
Speaker A
Was to reach out to councils to ask them to think about whether in the context of any redeployment of assets and and people that they were doing whether there were going to be some people that might in fact be freed up to be able to
Speaker A
work on some of our projects to make them go faster. And I was pleasantly surprised particularly from some of the smaller councils to be honest about the positive response that we got in terms of offering up staff.
Speaker A
That's the first point. The second point is that more specifically Calvin's been in touch with the chief executives of all of the councils I think as recently as yesterday Calvin.
Speaker A
Where we've set out some specific skill sets that we're looking for in order to be able to advance some of our strategic projects. So as I say great question.
Speaker A
Surprisingly positive response from the from the councils that we've reached out to. But you're absolutely right.
Speaker A
The resourcing issue may even flow over time and it's something we're acutely conscious of.
Speaker A
Calvin, did you have any points to add? Look I I think that sort of covers it all off Peter to be honest.
Speaker A
Good luck. Well that's really encouraging actually. It's good to get excuse me. It's good to get that clarification that's great. Now the question I had was about the energy and carbon management that's mentioned in the SOI here. I wasn't sure
Speaker A
whether that is the carbon audit that our councilors sort of before the last election we that was one of the directions that we gave staff that we wanted to get something organized in that which would help us I suppose formulate a plan you know for
Speaker A
climate change and that and is the energy management that's mentioned that that that last is is that feeding into that that that audit or or not?
Speaker A
So look the short answer is counselor that no it's well it's certainly not the audit that you were referring to.
Speaker A
I don't see any particular reason why the people that we use to that we engage to provide that support to councils could not help with that audit if that was something that the Waikato executive team were were interested in doing. But
Speaker A
I'm not actually privy to the particular the status of the particular piece of work that you're referring to.
Speaker A
I know that Martin Lunch who's one of the guys that tends to work with Waikato District Council has been doing some bespoke work in this area but I'm not sure whether it specifically relates to that report that you're referring to.
Speaker A
Okay. Oh well thanks thanks for the clarification. Okay. Any more questions? No okay well hey thank you very much for for that presentation and yeah particularly now in a in a period of significant change um it's really yeah great to see the
Speaker A
positivity we have going forward even in the with the with the weird world we have around us at the moment. So yeah thanks Peter Calvin very much.
Speaker A
Thank you very much Mr. Chairman. Yes. And I see Andrew Michael is available and will talk to us about the LGFA.
Speaker A
Thank you for the opportunity. I'll just maybe make a few brief comments and then touch on the current environment and then leave some time for uh for questions. So LGFA started in 2012. It currently has 67 member councils with a number of others in the
Speaker A
process of joining. And the current environment is probably just you know even for the councils that don't have any debt they realize that you know having access to finance is important so it's sort of probably speeding up you know their uh
Speaker A
their timetable for joining. LGFA is based on similar models in the Scandinavian countries. The longest of those is in Denmark that's been going for 130 years now. So what LGFA wants us to be a very long-term provider of
Speaker A
financing to the local authority sector. The objectives are interest savings on council's debt to provide a range of borrowing options so short-term and longer-term financing and probably the most important one is access to debt markets. And that's been the area that's
Speaker A
perhaps been the most challenging thing over the past couple of months. In terms of the financials the profit for the year to June 2020 which was forecast to be 10 million is on track so even ran the part numbers
Speaker A
for for April yesterday and again the the monthly profit is on track. Um a lot of the forecasting that's in the draft SOI is just out of date. It's just been superseded by the events that we've seen the last few months but that said
Speaker A
just remember that LGFA has 10 billion dollars of lending to the sector so we borrow from investors and on lend it and every time we do we take a small margin.
Speaker A
So the profit really on all that lending is locked in until those loans mature.
Speaker A
So even though there may well be some variability in profit a lot of it is is is locked in.
Speaker A
That said the profitability probably shouldn't be your your primary concern. It is where councils get the savings is the savings on the interest costs and certainty around accessing of of finance. So that's probably the key thing.
Speaker A
The current environment interest rates low so maybe that's one little bit of good news for for councils.
Speaker A
So short-term interest rates councils like yourself can borrow below 1% now. Um Longer term we just completed a 1 billion dollar debt issue um just over a week ago. So we borrowed for 6 years and we borrowed at 1.46%
Speaker A
for a billion dollars. So we will add on 20 points to councils or 25 points to Waikato I think it is. So you'll be accessing longer term money 60 money at around 1.7% just to give you some idea
Speaker A
of a borrowing cost. So that's you know one bit of good news. Um Probably two or three weeks ago we were receiving record borrowing requests from councils. There was a lot of councils knowing that maybe you know fee income
Speaker A
is dropping and they needed to get more money in to to cover that. So we'd never had a month where we've had a higher amount of borrowing costs.
Speaker A
Um LGFA was the first first non-government entity well entity other than the government to issue in New Zealand since the level four lockdown was imposed. For a while investors were very reluctant to invest.
Speaker A
It's just you know they're worried even if we buy it we won't be able to sell things in the system. whole risk aversion. But we had two developments. One was LGFA have a 1 billion dollar standby facility from the New Zealand government. That
Speaker A
expires next year. But the Minister of Finance provided a letter to LGFA saying that the government would roll that over for a further period of time. So that support from the government was just it's really symbolic to investors that
Speaker A
there's going to be that ongoing support from the government for LGFA. The second thing that occurred is the Reserve Bank announced that they were going to buy back government bonds.
Speaker A
Subsequent to that they added LGFA to the list of securities that they are able to buy. So they signaled that buyback up to 3 billion dollars of LGFA bonds from investors and it was that that really gave the confidence to
Speaker A
investors that if we buy them there's actually going to be another huge buyer in the market for that. So again you know the level of support that we're getting from the government has been extremely important.
Speaker A
Um there's going to be significant challenges for councils um particularly in the 2021 sort of financial year. I'm part of the working group that DIA are running looking at uh doing a lot of modeling on council financial performance this well for the
Speaker A
remainder of this year and and next year and that's feeding into a lot of the other government sort of work streams such as the recovery sort of work stream. So there's some quite sobering reading come out of that. For
Speaker A
Waikato you're probably well positioned in terms of your debt levels I'm high relative to some of the other higher growth councils in New Zealand.
Speaker A
So yeah, there are a lot of challenges and that's probably one of the challenges for us is that potentially we're going to get breaches of the financial covenants in the next financial year, not not this financial year. So today we've never had
Speaker A
a breach of the any of the financial covenants, but you know, if revenue falls significantly for councils with a large amount of debt to start with, then they could well breach that net debt to to revenue covenant. So that's something
Speaker A
we'll have to deal with. But for those growth councils, you know, one of the last tools they've really got is, you know, having to cut their capex and again that's not particularly conducive to starting growth in the economy and is
Speaker A
working against a little bit of what what the government wants to achieve. So I just like to, you know, we appreciate that there's no compulsion for councils to use LGFA. You're still free to borrow from any other sources
Speaker A
that you want. So I just like to acknowledge Ken and his team because Waipa was one of the early supporters of LGFA.
Speaker A
We very much value your support of us and you know, the professional relationship that we have.
Speaker A
Thanks Andrew. I I think yeah, almost goes without saying, but I'll say it anyway, LGFA has been a another great contributor to the local government scene generally and certainly well, I guess Waipa hasn't used your services that greatly. We certainly
Speaker A
intend to in the future, possibly even more with COVID, possibly not. We we don't know yet, do we Ken?
Speaker A
Yeah that's true. We we we don't know, but very comforted by that by that 1.7% number.
Speaker A
Andrew, yeah, that is that is very well priced borrowing ability. I like the one that was below 1% even better, but yeah, short term possibly isn't us that much.
Speaker A
No, thanks Andrew. Does anyone else have any questions? Bruce. And then clear. You're still muted, Bruce.
Speaker A
Press the space bar. There we go. No, no, you need to keep pressing it, mate.
Speaker A
Oh, okay, I'm learning. I've changed machines. One doesn't work, so one's in the bin soon.
Speaker A
Andrew, just page 33 share capital. I noticed Waipa's got 200,000 shares at 8.4%. Just a simple one. Malwa District have got double ours but at 9.9 of a percent. Could you explain that?
Speaker A
Yes, the shareholding is just something sort of historical. So when LGFA was started, it needed 25 million of equity.
Speaker A
So there was I think nine or 10 councils that were the initial subscribers and then they on sold some of the issues to a second group of councils that came in as shareholders.
Speaker A
So LGFA pay a small dividend to councils on their shareholding. That is 2% over our cost of funds, but our cost of funds might only be like 1 and 1/2% at the moment. So on 100,000 dollars of shares, you're only going to
Speaker A
be getting like a three or four thousand dollar dividend. So that is really not material. So the level of equity you have is really not that important. It is the savings that you get on your borrowing costs that are going to be the
Speaker A
big, you know, drivers of why, you know, councils should be members of members of LGFA. So it really doesn't give you a lot of advantage over, you know, a council that is a non-shareholder because again they're still getting the
Speaker A
same borrowing benefits that you are. It's just simply a fact we needed some councils to put in some equity to get the thing off off the ground. So again, you know, we're grateful for the councils that did that.
Speaker A
Thank you. I was just interested in doubling a figure and in ordinary terms and thinking well, how did how did you get to that? So no, thank you. I just I just worked it out for you, Bruce.
Speaker A
It's it's a rounding thing. It's we've actually got 0.444 of a percent and when you double it, you get 0.88, so it's just rounding up and down.
Speaker A
Thank you, Mr. T. You're so knowledgeable. All good. Clear. Yeah, thanks. The question I had is about LGFA saying one of their principles is that they'll demonstrate social and environmental responsibility.
Speaker A
And one question that I've been asking in the past is, will LGFA consider introducing something like green financing or environmental bonds? You know, like other productivity commission did a report to a low emissions economy, you know, a couple of years ago that
Speaker A
highlighted that actually there's a bit of a gap in New Zealand with this kind of financing where councils could borrow for a project that would be, you know, reducing emissions or for environmental outcomes. And usually it's sort of a
Speaker A
slight margin less or something just to say it's a good thing to be doing and we want to encourage councils. Um, do you think LGFA would do that or are you talking to government about that?
Speaker A
I thank you for that question. It is the whole environmental issues have been pushed a little bit to the back at the moment because of everything that's going on, but LGFA has done a significant amount of work on
Speaker A
that and we are intending to offer green financing to councils. So remembering that it's not LGFA that is doing things with the money. We're just sort of leaning up so we sort of sit in the middle.
Speaker A
Um, we've actually got all the documents up and ready to go, but the issue is we're going to need councils to identify green projects.
Speaker A
Also there's three categories, so there's green, social and sustainable. So for example, a lot of the water things actually come under sustainable.
Speaker A
So there's a whole industry around it and it involves identifying things and also there's a certification process involved on that. So I could probably speak to you for a day on this topic because it is if you see the documents, they, you
Speaker A
know, it must be like 100 pages long and we've got all that ready to go. So it is all happening, but it will be it's not going to be compulsory. It will be up to each council as to how they use that.
Speaker A
But green investing is a big thing globally, probably particularly in Europe, probably least so in in the US, but certainly it does give you better access to debt markets if you can under a green framework.
Speaker A
I'm thrilled to hear that you're working on it. I actually think you should report on it, say that you're actually preparing or or, you know, working on a proposal cuz I think a lot of people would be looking
Speaker A
for that and yeah, I'm just saying well, congratulations. I think it's great that you have you have made yeah, some I suppose some groundwork progress and yeah, look forward to seeing yeah, when you can actually make an announcement.
Speaker A
Yeah, we did flag we have a council day each year sort of in July and we did flag that it was something we intend to do. So we would, you know, give the update again this year, but it is something that's definitely
Speaker A
happening and we're more than happy to come and speak to you if you want to you know, more in-depth discussion about about that side of the business.
Speaker A
Yeah, thank you. Right. Thanks. Yeah, any other questions for Andrew? No? Okay, that being the case, thank you very much for um zooming with us and yeah, always good. Might see you in person one of these days. Yeah, no
Speaker A
pleasure. Okay, thanks very much. Cheers. Okay, well, thanks for that, everybody. We have a recommendation that runs from A to G. I'm not even going to attempt to read them all out.
Speaker A
I'm sure you Ken. Yeah, sorry Andrew. Probably the thing we just need to turn our attention to cuz cuz obviously a key part of that series of recommendations is is the three letters that are in in the appendices, appendix
Speaker A
appendix four, five and six. So so I do just wonder whether just before you before you put the recommendation, whether it is just whether just seeking any any input into those three letters because obviously when we when when you
Speaker A
actually do put the recommendation, you you will be essentially locking in those letters. Yeah, thanks for that, Ken. You're very right. I did think of that. I read through them and I I felt they seemed pretty appropriate as
Speaker A
they are Um, particularly with um um Oh, gosh, my mind went blank there. Particularly with the airport, um, we acknowledge that there was going to be a major revision in the in the REOI.
Speaker A
Um, but yeah, is there anyone Does anyone have any thoughts on a on a No?
Speaker A
All good. Uh, thanks for that, Ken, but I think we're all good. So, um, could I have a mover, please?
Speaker A
Thank you, Bruce. And a seconder? Thanks, Lou. Cheers. All in favor? Aye. All right.
Speaker A
Contrary, no. It's carried. Okay. Uh, moving on to item number nine. And I see Nada is there. Um, Ken, do you want to introduce or Uh, Nada, look, I'm I'm very happy to leave this, um, to to Nada to, um, to
Speaker A
take us through the the financial report. Um, yeah, I I I guess the only thing I'm of significance and again there is a health warning there, a little bit like, um, like the four-monthly report that you saw at the
Speaker A
last council meeting. Um, obviously anything in that, um, in that forecast column, um, is, um, yeah, is is obviously outdated by the, um, by the COVID events. Um, so, um, yeah, so, um, a huge effort has, um, gone on right
Speaker A
across some across council in the last um, in the last two or three weeks, um, to, um, yeah, to reforecast and you should see the results of that reforecast and you should have a obviously a quite a different, um,
Speaker A
forecast column in the next, um, financial report you see. But yeah, but that look with that that said, I'm happy for Nada to take us through the report.
Speaker A
Thanks very much. Thanks, Ken. Um, good afternoon, everyone. So, at the currently standing at the end of March, the total income is currently at 74% of the forecast and the operating expenditure is at 72% of the full year
Speaker A
forecast. We have vested assets of 11.8 million recognized to date and that's currently 94% of the forecast. Uh, discovered assets is 402,000.
Speaker A
Um development and reserve contributions, um, of 4.4 million have been received to date and subsidies and grants are at 47% of the forecast.
Speaker A
Uh, we have capital expenditure to date of 71.3 million, which is 51% of the full forecast.
Speaker A
And there have been no major budget changes this month due to reforecasting happening now.
Speaker A
Um, there was one arbitrage arrangement made on the 12th of March that utilized 6 million dollars of short-term fixed borrowings, um, and it was on match terms maturing in June and we yielded approximately 13,000 of net interest.
Speaker A
Um, the rates we have the 62.1 million that's been set for the year. Um, prior years outstanding at this time was 62,000 and we have currently 464,000 outstanding at year to date.
Speaker A
Um, and then I'll take the rest of uh the report as being read and if anyone's got any questions.
Speaker A
Okay, any questions? Not a big change, um, really to the what we had presented at the council meeting, so, um Yeah, pretty much. Thanks for that, Nada. Um, that's great and there being no questions, I'll ask for a mover for
Speaker A
the recommendation. Thank you, Roger. And a seconder? To second. Thanks, Clea. Oh, thanks, Clea. I'll catch you next time Philip.
Speaker A
Um, all in favor? Aye. Aye, contrary, no. It's carried. Thank you very much and thanks, Nada. And, uh, we'll move on to item 10.
Speaker A
Health and safety. Ken. What should I say? Uh, yeah, look, I think, um, is she a Steve Yeah, Steve is still there, so, yeah, this is absolutely um Steve Shaw's baby and, um, and in fact Bev is Bev as
Speaker A
well who has joined us, so, yeah, I'll hand over to to Steve and Bev.
Speaker A
Great. Welcome, Steve and Bev. Hi, guys. Another good news story. We need some of them.
Speaker A
Um, Steve, do you want to start off? Oh. No. Yeah. Bev, you're Yeah, all yours.
Speaker A
All mine? Um, okay, so, um, I take it that you guys have, um, have read the report, and, um, the attachments, um, to this.
Speaker A
Uh, I I I do see that there are a couple of questions from Clea.
Speaker A
Uh, but is there any anything else that you guys would like to ask before I get to those questions from Clea?
Speaker A
Looks like the floor is yours, Clea. You had a couple of questions. Yeah, well, I mean, um, the first one was that there were four the council entranceways, whether the location of a number of, um, accidents.
Speaker A
So, if you looked into those entranceways, is there something to do with the entranceways? Like, um, yeah, Bev, have you You want to try? got an idea what Oh, do you What? They they Yeah, they were they were just the two,
Speaker A
um, trips in in entranceways. Um, and we did get property to have a look, um, and there wasn't anything of significance that we found. You want to try?
Speaker A
Oh, yeah. Can you hear Can you guys hear me now? Oh. Yeah, yeah, I can hear you fine.
Speaker A
Yeah. Yeah, so, we didn't find anything of significance, um, of why they tripped. The only thing we It was sort of at the lip where the doors, um, kind of closed at and this is at Cambridge, so, I did property did have a
Speaker A
look at those, um, but we couldn't find anything that would have caused, um, those trips and we haven't had any reported since, so, it may have been just one of those things, but we are continuing to monitor anyway.
Speaker A
Yeah, yeah. Oh, no, that's what I mean, it would just be, um, our luck that, you know uh our facilities are the causing causing a year a problem for people that are coming in to visit. Yeah, yeah. So, I
Speaker A
just thought it'd be good to know a little more about that. Yeah. Okay. Can you hear me?
Speaker A
Yes, yes. Yep. Wonderful. I I'm so sorry. I I lost my my, um, voice there for a minute. Um Sorry, Clea, I understood you had another question as well and that was regarding, um, what ways we have to keep
Speaker A
track of how health and safety resources and processes are being utilized. Yeah, and that is a really good question. Um, perhaps if I, um, if you go to the the A3 or the big report on the page, um, above the health and safety due
Speaker A
diligence plan monitoring, above that is the health and safety lead indicators. Now, uh, these lead indicators are basically the resources, um, and the contracts that we use and so essentially what we pay for, um, and that's how we monitor
Speaker A
and provide to you the details in what we're spending our health and safety budget on. We do have a very small health and safety budget, obviously, um, but it it What this health and safety lead indicators shows you is that we,
Speaker A
um, we pay an ongoing, uh, fee to the Waikato Occupational Health Consultancy who deliver our health monitoring services. We also provide, um, uh, money to the EAP service, which is, um, so provides, um, I guess counseling services to all of
Speaker A
our staff. Uh, we also have training health and safety training, so, we have set aside 27,000 for health and safety training in an annual year, uh, and that's uh that obviously is first aid refreshers and um our health and safety committee
Speaker A
training, as well as, um, any investigation training, which we're looking at at the moment, and our our regular conflicts, uh, training, which is obviously comes out of that budget as well. And these are all reported through these reporting mechanisms to yourselves
Speaker A
and also to the executive team. So, um, I guess that's one of our our due diligence and how we show that we are utilizing, um, external resources and finances appropriately.
Speaker A
Oh, no, that that's a great explanation and I can see how it it all fits together. I guess, um, I was wondering about how you knew if a just individual staff members were actually um you know, knowledgeable about health and
Speaker A
safety practices or if they were starting a new task or something that they they they didn't actually get the right briefing and the stuff like that.
Speaker A
Like, um, are you confident that that kind of, um, sort of more grassroots, um, of those processes are working well as well?
Speaker A
I think Bev, feel free to jump in here, but um, I'm actually very confident because we have some uh very good well-educated health and safety representatives now.
Speaker A
And I must say they are committed, they are they attend the meetings, they go back to their respective teams, and they disseminate that information.
Speaker A
Um you know, we're making sure that any training is out there. I've got Bev and Terry which we monitor the health and well-being of all our staff and especially team leaders and supervisors Oh, well, that's great. Thank you.
Speaker A
Roger I Yes, thank you. Can you hear me all right? I can. Oh, doesn't seem to be coming through my headphones.
Speaker A
Um I think this is a great report. Um but I would the question I have is is there any way that we can assess some of the external influences on our team's health and safety from COVID-19?
Speaker A
Yes, absolutely. And again, Bev, feel free to jump in here. This report only covers the period from November through to February. So, um critically it misses essentially misses all the COVID-19.
Speaker A
That will come in the next report. But yes, absolutely, we are we have a staff monitor or staff register which we monitor the health and well-being of all our staff.
Speaker A
Any that have immuno compromised um health issues. We are aware of where our staff are, what they're doing, and with our slightly moving to level three next week, we've gone out to all managers to advise us of where exactly their staff are
Speaker A
going to be working, whether they will be continuing to work from home, whether we will have some like our parks operators working back out in the community. And from a health and safety perspective, we're working up some really good
Speaker A
protocols around how to keep them all safe. So, I hope hope that's answered your your question, Councillor Gordon. Yeah, I was I was more um wondering about whether any of the external influences over which we've got no control, you know, that they're
Speaker A
actually finding in their own family circumstances or something like that that's actually affecting their their mental state, which obviously is a health and safety issue.
Speaker A
I might I can come in here if you like, Steve. Um I've I've just come out of a webinar with EMA um in which one of New Zealand's leading people on health and safety, Paul Jarvie, was part of. So, they've
Speaker A
actually rolled out quite a few um ways on how this can be managed in multiple levels.
Speaker A
And I know that our Waipa team have been working along those same lines. So, you know, this is all pretty new to everybody, so we're still writing up those protocols and um and hopefully getting everything in place prior to actually going out next
Speaker A
week on level three. Oh, good. Be great to see those. Thanks. Right. Anybody else?
Speaker A
No, I just like to say it's it's great to see your health and safety program maturing each each report that we get.
Speaker A
Um and I just wanted to say I I think um your your one-page Gary's health and safety commitment is a that's a really really good um you know, thing to put in place.
Speaker A
There's nothing like everybody in the organization seeing that the CE is committed to to the program. So, uh yeah, congratulations on that.
Speaker A
Thank you. Thank you. Thank you. Yeah. Cheers. Well done. Okay. So, I have a recommendation to accept the report. Do I have a mover, please?
Speaker A
Thank you, Claire. Thank you, Elwyn. Um all those in favor, please say I. I.
Speaker A
I. Contrary, no. That's carried. Thanks, ladies. It's it's terrific. Welcome, Phil. We're just going to pass pass a motion to move into public excluded and then go off line. Thanks, Roger. And a seconder, thanks, Susan. All in favor,
Speaker A
I. I. Contrary, no. It's carried. So, Sam, we'll let you do your thing.
Topics:Waipā District CouncilFinance & Corporate CommitteeCOVID-19 impacttourismWaikatovisitor expenditurebusiness closureswage subsidyairline connectivitystrategic projects
