Publication No 2015-04 - Southland Regional Council · 11 Our Activities in Depth – Groups of...

Publication No 2015-04

Annual Report

Environment Southland’s achievements from July 2015 to June 2016

This Annual Report for 2015/16 provides a summary of the achievements and progress that Environment Southland has made towards the targets set for its priorities, as well as the other important areas of business we deliver and collaborate on. Financially, Environment Southland is in very good shape, with a strong balance sheet and significant financial reserves. The Council is pleased to report a better than expected overall result, with a deficit of just $382,241 compared with a planned deficit of $1.755 million. This was a result of improved investment returns, slightly higher than anticipated income and a small reduction in overall expenditure. This has been an exciting year, with significant progress made on our major projects and business as usual being completed to a high standard. This report has been prepared in accordance with Part 3 of Schedule 10, Clause 34 of the Local Government Act 2002. The Council and management of Environment Southland confirm that all the statutory requirements in relation to the Annual Report have been complied with. This report was approved and adopted by a meeting of the Council on 5 October 2016. It correctly reflects the Council’s financial position and operating results for the year ended 30 June 2016 and complies with all statutory requirements in relation to the Annual Report.

Ali Timms Rob Phillips Chairman Chief Executive


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Contents

Page

3 Key highlights from the year

Section 1: 2015/16 Year in Review (Te Arotake O Te Tau 2015/16)

4-5 How we’ve met our priorities – our Big 3 stories

6-7 Financial Summary

Section 2: Setting the Scene (Whakaritea Te Wāhi)

8 Our Region

9-10 Our Strategic Direction Focus and Values

Section 3: Our Activities in Depth (Ko Te Hohonutanga Ō Ā Tātou Mahi)

11 Our Activities in Depth – Groups of Activities

12-18 1. Providing for Management of Southland’s Sustainability

19-21 2. Enabling Resource use by Communities, Businesses and Individuals

22-24 3. Emergency Response and Preparedness

25-27 4(a). Biodiversity and Biosecurity

28-30 4(b). Flood Protection and Control Works

31-34 5. Community Representation and Communication

35-38 Report on Long-term Plan and Policies

Section 4: Finances (Pūtea)

39-86 Financial Statements and Notes to the Financial Statements

87 Additional Disclosure Information

88-93 Local Government (Financial Reporting and Prudence) Regulations 2014

Section 5: Audit Opinion (Arotake) 94-96

Section 6: Supplementary Material (Ko Ētehi Atu Kōrero/Mea)

97 Opportunities for Māori to contribute to Decision-making

98 Collaboration across Councils – Shared Services

99 Equal Employment Opportunities

100 Health and Safety at Work

101 Council Directory


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Key highlights from the year

-

We have completed robust physiographic science for all catchments.

We continue to engage with our community on water issues, completing a three-month engagement period that generated hundreds of ideas.

We have placed more emphasis on biodiversity/ biosecurity, developing a plan for the co-ordination of these activities.

We have made progress on a framework for maintaining and improving water quality in Southland by notifying the proposed Southland Water and Land Plan.

We initiated the Clean Air Loans scheme with the Invercargill City Council to help people change to cleaner home heating options.

We have secured strong partnerships with national science institutes and industry organisations for our science and economic programmes.

We have developed a proposal for a Fiordland Marine Pathway Plan and our Possum Control Area programme continues to grow.

We have completed 160 new farm plans covering over 53,000 hectares.

Environment Southland is in good financial shape with an unaudited deficit for the year of $382,241, against a planned deficit of $1.755 million.

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Section 1: 2015/16 Year in Review (Te Arotake O Te Tau

2015/16)

How we’ve met our priorities – our Big 3 stories Water Underpinning Southland’s long-term viability is the quality of the water we drink, swim, fish and play in, and the quantity needed for industry, farming and living. Managing Southland’s freshwater resource is our top priority. Water and Land 2020 & Beyond, a partnership project with Ngai Tahu ki Murihiku, is our overall response to the management of Southland’s water quality and quantity issues and the Government’s National Policy Statement for Freshwater Management. The Water and Land 2020 & Beyond project covers: ▲ understanding our water

resource – scientific research;

▲ government requirements and community ambitions

▲ development of plans to find Southland-specific solutions;

▲ implementation and monitoring requirements.

In order to develop Southland-specific solutions, we committed significant investment over three years from 2015 to a comprehensive research programme to prepare for the limit-setting process (for discharges to and abstractions from waterways) required by the Government. It includes an extensive science programme, an economic project, and social and cultural work streams and is being done in conjunction with iwi, industry and national science agency partners. One year on, our leading edge, robust physiographic science has been developed. It brings together information about Southland’s geology, hydrology

and water pathways to explain why different land use activities have different impacts on the environment. The physiographic science informs the proposed Southland Water and Land Plan, which was notified in June this year, after a three-month informal engagement period in 2015. The plan has a focus on moving all land users to good management practices. Farm environmental plans are a key tool to help achieve this. Preparations are currently underway for the limit-setting process, which will require a great deal of community input. It is scheduled to begin at the end of 2016 on a catchment-by- catchment basis. In addition to these actions 160 individual farm plans have been developed during the year over 53,000 ha – exceeding the total region-wide goal. These farm plans build on science, good practice advice and education about ways to positively improve farm practices for water quality enhancement. More staff resources are being dedicated to working with farmers on these in the coming year. In the 2015/16 year a full state and trend analysis of the Southland catchments was not completed – therefore a trend for this past year cannot yet be reported on. However, a summary document was produced in October 2015 that presents the “state” of water quality in Southland at that time, and reporting on trends from 2009-2014. While ideally there would be no pollution incidents in Southland, Council staff have

responded to 671 incidents in the region this past year. Almost all high level high priority pollution incidents (93%) were responded to within agreed timeframes and 93% of medium priority. There have been 26 infringement notices, 14 formal warnings and 12 abatement notices in the 2015/16 year and 1.7% significant non-compliant activities from 1,411 inspections undertaken. Environment Southland aspires to nil exceedances to national guidelines for bathing and shellfish sites but noting that natural events (such as flooding), as well as “pollution incidents” will preclude this being achieved. Air Environment Southland initiated its Air Plan Review and the Breathe Easy Southland air quality campaign in 2012. An education-first approach towards improving air quality is being taken and www.BreatheEasySouthland.co.nz has been recently upgraded and is a one-stop website for air quality information. Phase 1 of the Air Plan Review resulted in the notification of the Draft Air Plan in late 2015. This focuses on rules for home heating, outdoor burning, agricultural spraying and fire training. Invercargill and Gore have ongoing air quality problems during winter that do not always meet the Government’s National Environmental Standards for Air Quality (NES). We know from scientific investigations that the primary cause of exceeding

http://www.breatheeasysouthland.co.nz/

http://www.breatheeasysouthland.co.nz/

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these standards is the pollutant PM10 due to smoke from home chimneys. As one step towards addressing this we made a commitment, in partnership with the Invercargill City Council, to provide financial assistance of up to $500,000 incentivising cleaner heating options for Invercargill residents (promoting low interest loans via Invercargill City Council). A further $140,000 has been earmarked for Gore residents. The NES sets a target of no more than three exceedances of PM10 for Invercargill, and no more than one for Gore by 1 September 2016. While this target was not achieved for 2015/16 the number of breaches did reduce from the benchmarks set in 2011 (Invercargill dropped from 13 to 8, and Gore from 4 to 2.) As the Government is about to review the National Environmental Standards for Air Quality, Phase 2 of the Air

Plan Review has been deferred to the next Long-term Plan. Biodiversity/biosecurity A richness of biodiversity is highly desirable because it adds to, and is a good indicator of, the health and resilience of our natural resources. In Southland we have areas with particularly high biodiversity values such as Fiordland and Stewart Island. Overall about 32% of the work Environment Southland undertakes contributes to the maintenance of biodiversity across the region. Environment Southland has made biodiversity and biosecurity a priority area of activity and is focusing on alignment of programmes across Southland, as well as proactive identification and management of pest species. A very successful eight-week eradication campaign against velvetleaf, directed nationally by the Ministry of Primary Industries and led by Environment Southland, ensured the destruction of

199 plants (each one capable of producing 17,000 seeds) over 4,442 ha.

Seven new Possum Control Areas (PCA) were established covering 53,000 ha. We now have about 1,400 farms in more than 41 PCAs covering some 275,000 hectares across Southland. The Council has begun a review of our Regional Pest Management Strategy. In March we began this by listening to what our community had to say and currently a draft plan is being developed for release. We also notified a proposal to develop a Fiordland Marine Pathway Management Plan as a way to prevent marine pests being transported (on boat hulls and gear) into the pristine waters of Fiordland. The Council and its officers are responsible for the preparation of this Annual Report.

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Financial Summary

Annual Plan Actual Actual Annual Plan LTP

2014/15 2014/15 2015/16 2015/16 2015/16

$000 $000 Sources of Funding $000 $000 $000

7,202 7,205 General rates, uniform annual charges, rates penalties 7,687 7,654 7,654

6,657 6,649 Targeted rates 7,087 7,094 7,094

0 0 Subsidies and grants for operating purposes 0 0 0

7,003 8,466 Fees and charges 7,513 7,775 7,775

3,548 4,048 Interest and Dividends from investments 4,287 3,548 3,548

704 1,014 Local authorities fuel tax, fines, infringement fees and other receipts 1,234 814 814

25,115 27,382 Total Operating Funding 27,808 26,886 26,886

Applications of Operating Funding

22,209 22,047 Payments to staff and suppliers 22,794 23,396 23,396

50 75 Financing Costs 124 60 60

5,580 6,230 Other operating funding applications 6,467 6,006 6,006

27,838 28,351 Total Applications of Operating Funding 29,385 29,462 29,462

(2,724) (970) Surplus/(deficit) of operating funding (1,578) (2,576) (2,576)

Sources of capital funding

0 0 Subsidies and grants for capital expenditure 0 0 0

0 0 Development and financial contributions 0 0 0

0 0 Increase / (decrease) in debt 0 0 0

0 0 Other dedicated capital funding 0 0 0

108 28 Gross proceeds from the sale of assets 22 149 149

0 0 Lump sum contributions 0 0 0

108 28 Total sources of capital funding 22 149 149

Applications of capital funding

Capital expenditure

0 1,553 - to meet additional demand 361 263 263

106 94 - to improve the level of service 120 203 203

2,055 447 - to replace existing assets 309 504 504

(2,863) (3,035) Increase/(decrease) in Reserves 2,554 (1,106) (1,106)

(1,913) 0 Increase/(decrease) in Investments (4,900) (2,291) (2,291)

(2,616) (941) Total applications of capital funding (1,556) (2,427) (2,427)

2,724 970 1,578 2,576 2,576

0 (0) Funding Balance 0 0 0

678 710 Depreciation expense (not included in the above FIS) 704 794 794

(2,724) (970) Surplus / (deficit) of Operating Funding in Funding Impact Statement (1,578) (2,576) (2,576)

Add / (deduct)

1,577 3,896 Increase / (decrease) in fair value of investment portfolio 1,853 1,616 1,616

0 (24) Profit / (loss) on disposal of assets 15 0 0

(678) (710) Depreciation (704) (794) (794)

0 (64) (Increase) / decrease in provision for doubtful debts 31 0 0

(1,825) 2,128 Surplus / (deficit) in Statement of Comprehensive Revenue & Expense (382) (1,755) (1,755)

Reconciliation of Funding Impact Statement to Statement of Comprehensive Revenue & ExpenseFor the year ended 30 June 2016

C o n s o l i d a t e d F u n d i n g I m p a c t S t a t e m e n t

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The following table gives historical perspective to the finances of our organisation:

Net Deficit -$0.7

Net Surplus $2.1

Net Deficit -$0.3

Expenses $26.9

Expenses $29.2

Expenses $30.0

Income $26.2

Income $31.3

Income $29.7

($5) $0 $5 $10 $15 $20 $25 $30 $35

2014

2015

2016

$M

The Council's Income and Expenses - Three Year Trends - $M

$13.8 46%

$2.2 8%

$1.3 4%

$4.4 15%

$5.5 18%

$2.8 9%

providing for management ofSouthland's sustainability

enablement of resource useby communities, businessesand individualsemergency response andpreparedness

services - biodiversity andbiosecurity

services - flood protection andcontrol works

community representationand communication

Breakdown of Expenditure by strategic issue

KEY FINANCIAL INDICATORS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000

Revenue

General Rates 3,313 3,399 4,547 5,472 5,333 5,750 6,033 6,421 7,076 7,523

Separate Rates 4,323 4,567 4,800 4,710 5,200 5,485 6,261 6,439 6,649 7,087

Levies and Contributions 3,427 2,921 735 296 606 1,163 974 735 845 1,108

Other Revenue 3,778 4,613 5,483 5,414 5,944 6,837 7,262 7,635 8,764 8,475

Dividends 1,352 1,352 1,962 2,355 3,139 3,488 3,663 3,750 4,012 4,273

Interest 1,293 800 595 1,862 2,463 1,743 999 1,257 3,932 1,196

17,486 17,652 18,122 20,109 22,685 24,466 25,193 26,237 31,278 29,662

Expenditure (17,497) (18,728) (17,453) (17,710) (20,170) (23,244) (25,049) (26,958) (29,150) (30,044)

Surplus (Deficit) (11) (1,076) 669 2,399 2,515 1,222 144 (721) 2,128 (382)

Capital expenditure 656 671 658 1,407 914 697 672 770 2,094 828

Financial Position

Property, Plant and Equipment 35,492 35,654 35,830 36,449 36,502 36,504 36,509 36,526 37,696 37,783

Total Assets 70,625 70,084 70,562 73,035 76,517 78,916 79,067 77,955 83,021 80,437

Net external public debt - - - - - - - - -

Total Public Equity 68,678 67,602 68,271 70,670 73,185 74,407 74,551 73,830 75,958 75,576

13.80:1 10.49:1 11.46:1 11.81:1 9.34:1 7.37:1 7.34:1 7.75:1 5.09:1 6.84:1Ratio: Current Assets to Current Liabilities

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Section 2: Setting the Scene (Whakaritea Te Wāhi)

Our Region

Southland is the second largest region in New Zealand. It covers an area of 34,000 square kilometres (12.5% of New Zealand’s land mass). The coastal boundary extends some 3,100 kilometres from Awarua Point (Fiordland) on the West Coast, to Waiparau Head (Catlins) on the fringe of the east coast, and includes Stewart Island/Rakiura. In all, 53% of Southland’s land area is managed as public conservation land. Farms occupy 85% of the remaining lands.

Our River Catchments Four major river catchments extend over Southland - the Waiau, Aparima, Oreti and Mataura. Combined, these catchments cover 54% (18,305 square kilometres) of the region. The headwaters of the Mataura River lie in the Eyre Mountain range, west of Kingston. The Mataura catchment covers an area of 5,300 square kilometres.

The Oreti catchment extends from east of the Mavora Lakes down to Invercargill, covering an area of 3,500 square kilometres. The headwaters of the Aparima catchment lie on the eastern side of the Takitimu mountains to the west of Mossburn. The catchment covers an area of 1,355 square kilometres. The catchment area of the Waiau is 8,150 square kilometres.

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Our Strategic Direction, Focus and Values Change of focus Southlanders want a region that is rewarding and enjoyable to be part of, prosperous and which recognises contemporary values such as protection of the environment and enhancement of biodiversity. Environment Southland recognises this cannot be achieved by relying largely on the regulatory approach currently taken and that the Council of the future needs to be more pro-active and enabling, engaging and partnering with stakeholders, leading with purpose and by example. Vision Councillors have the view that the organisation needs to be one that is keeping pace with the rest of New Zealand and its vital signs (economic and population growth and social cohesion) are positive but the

main drivers for change are uncertain in terms of timing and magnitude. For the purposes of giving context for an Environment Southland vision, it is assumed that a vision for the Southland region would include aspirations of “prosperity and social cohesion”. This would be the result of agricultural growth (within nutrient or allocation limits) and diversification of the economy involving technology, agriculture and non-agricultural industries. It may also involve increased productivity from natural capital and greater intensification of economic activity, which strengthens regional prosperity and supports local communities and community services. The vision for Environment Southland is: “A vibrant organisation actively enhancing the experience of

living and working in a sustainable Southland”. This is a leadership vision of an organisation, within its remit, seeking to sustainably enhance the regional experience through a stronger and more diverse economy, a protected and enhanced environment and strong social cohesion. In particular, it recognises the importance of “natural capital”, the natural assets of the region whether they be wilderness areas for tourism, landscape for agriculture, coastline for fishing and port facilities, the land to grow things on, recreational uses of rivers and coast, the places where people live and work, or the people themselves. The following diagram captures the essence of the Council’s strategic plan and its refocussed approach, through a series of higher level goals. Strategic direction for the programmes and projects is provided by the focus areas.

Vision: A vibrant organisation actively enhancing the experience of living and working in a sustainable Southland

Goal One

Greater prosperity from

natural resource use

Focus Area 1

Water, land and coastal

management

Focus Area 2

Air quality

Goal Two

Greater security through

diversification

Focus Area 3

Biodiversity and biosecurity

Goal Three

Greater consensus on

vision and direction

Focus Area 4

Risks and natural hazards

Focus Area 5

Transport

Goal Four

Greater innovation

through energy, information and

example

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Values for the Organisation The key values that underpin and reflect the approach and internal culture of Environment Southland are shown in the diagram below.

Development of the key value set followed recognition of the value contained in the culture of the organisation and how that translated into the way we go about our business.

The values jigsaw diagram demonstrates recognition about what is unique about Environment Southland; what our community needs us to be; and our essence in the community.

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Achieved 14

Not Achieved

10

For the 2015/16 targets -

Section 3: Our Activities in Depth (Ko Te Hohonutanga Ō Ā Tātou Mahi)

Our Activities in Depth – Groups of Activities Set out on the following pages are the activities we undertook and the associated financial forecasts and actuals for the year ended 30 June 2016.

Groups of Activities, Levels of Service and Performance measures

Within this document we report on our proposed output targets under groups of activities, which we believe summarises the key issues we need to address, or the key activities we undertake. The groups of activities are:

1. providing for management of Southland’s sustainability;

2. enabling resource use by communities, businesses and individuals;

3. emergency response and preparedness;

4(a). services (e.g. biosecurity and biodiversity);

4(b). services – flood protection and control works;

5. community representation and communication.

We manage our work in activities and these activities aggregate up to our divisional management structure. Each programme area contains a statement which shows which of our activities delivers the programmes, the cost thereof, and the combined funding sources involved. The funding arrangements are in accordance with the Revenue and Financing Policy as set out in the 2015-2025 Long-term Plan.

Effects of activities

No significant negative effects on the social, economic, cultural and environmental wellbeing of

the regional community have been identified for any of the activities undertaken by Environment Southland. On the contrary, most of the activities are undertaken to counteract negative effects produced by factors outside Environment Southland’s control.

Some may argue that the community agreed resource management plan regime that the Council operates under may restrict the ability to maximise the immediate economic potential of the natural resources of the region and that represents a significant effect on the economic and social wellbeing of the local community.

However, the Council is of the view that a regime that enables natural resource use and development must balance the economic interests of the present with the need for sustainable use into the future, alongside any significant negative social, environmental or cultural effects that unsustainable use may deliver. In addition, activity proposed to be undertaken by the Council in the Long-term Plan has the objective of improving the existing regime where negative environmental effects are evident, may arise, or need to be managed.

Performance measures

Performance measures are included in the activities which are combined into the organisation’s work plan. Management control over each activity is based on project briefs, which record outputs to be delivered and detail of budgeted costs and performance targets to be met.

If you wish to know more about our projects or activities, please contact us.

Our performance is measured in terms of:

▲ Timeliness - completion of activities by 30 June 2016, unless otherwise stated.

▲ Cost - completion of activities within the planned costs.

▲ Quantity - completion of outputs to the quantity standards specified.

▲ Quality - completion of all activities to meet quality expectations of elected Councillors and quality control procedures in place.

▲ Location - in all cases where a location is specified, the target is to deliver the service in that location.

Results

The results against the performance measures and targets for the 2015/16 year are shown as Achieved or Not Achieved. Overall, the year end results for the 2015/16 performance targets is a 58% achievement level, with non-achievement of some targets being the result (in hindsight) of unrealistic quantitative measures; and primarily the introduction of emergency requirements for the velvetleaf response.

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1. Providing for Management of Southland’s Sustainability

The Council’s aims in this activity are to address the sustainable management and use of the natural resources of the Southland region and build on the day-to-day functions of the Council outlined in Activity 2 (enabling resource use by communities, businesses and individuals). This section primarily addresses the management frameworks for water, air quality and coastal resources. The main topics for 2015/16 were focused around Southland’s Big 3 and specifically the banner projects: ▲ Water

Extensive work continued on completing the leading-edge physiographic zones workstream to understand Southland’s unique physical geography and hydrology. That work is being undertaken in partnership with some of the best scientists in the country, and involving peer review at both international and national levels. That robust science was utilised in the development of the proposed Southland Water and Land Plan which the Council publicly notified on 3 June 2016.

▲ Air quality

The National Environmental Standard on Air Quality (NES) requires the Council to meet the health-inspired air quality standards. Public feedback resulted in changes to the draft Air Plan which was notified in October 2015. In the 2015-2025 Long-term Plan, Environment Southland and the Invercargill City Council committed $500,000 each

per year for three years for a Clean Air loans scheme. That scheme was launched in early 2016 to assist people in the Invercargill airshed and is being delivered by Awarua Synergy on behalf of the Southland Warm Homes Trust.

What are the community outcomes we seek? Environment Southland’s outcomes are: ▲ Southland’s waters are safe

to drink, safe to gather and eat fish from, and safe to swim and play in;

▲ instream values and fish and wildlife habitats are protected at habitat sustaining levels, given the underlying natural physical conditions of the catchment;

▲ the community can be sure that uses of water, including discharges into water, land, coastal water and discharges to air do not contravene set standards that seek to minimise adverse effects;

▲ the community and tangata whenua take active roles in and responsibility for water resources within each Freshwater Management Unit;

▲ the short and long-term effects of resource use on the region’s waters and associated ecosystems are understood and adverse effects are addressed in a timely manner;

▲ the community is empowered and encouraged to make decisions about land use that protect their economic viability and minimise on-site and downstream effects on land and water resources;

▲ risks to the built environment by natural hazards are avoided;

▲ the community better understands the region’s soil resources and land users make management decisions taking into account risk to the properties of soil;

▲ the community’s and tangata whenua’s expectation of being able to use the coastal environment for their livelihood and recreation, while protecting significant areas and/or minimising the environmental effects of resource use, is met;

▲ the short and long-term effects of resource use on the region’s air quality and ecosystems are understood and the community takes an active role and responsibility for improving local air quality;

▲ nuisance and offensive odours are minimised and repeat occurrences are avoided.

What are the key issues? Environment Southland needs to deliver a limit-setting framework for freshwater, which leads to a reduction in contaminants from non-point discharges reaching fresh and estuarine water. Indicators are showing deterioration in water quality from the standards agreed by the community and that deterioration is caused by the intensification of land and resource use. Resource use that is authorised under the Resource Management Act may occur, which may still have a negative effect on the environment. Examples are: ▲ inappropriate use of

stormwater drainage

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Future Challenges

Continuing water quality improvement

Coastal & aquaculture management

Impacts of climate change

Setting water take & discharge limits

Cleaner air quality

discharges from industries and urban areas;

▲ discharge of contaminants to air via inefficient burning of solid fuel;

▲ over-allocation of surface and groundwater resources;

▲ coastal management/marine farms/cruise ships/ navigational safety.

Why are they issues for the Southland region?

Southland’s rich farmland is

made viable by regular rainfall onto our land, which is predominately flat or rolling country. At times, the Southland soils are too wet for optimum agricultural activity so the developers of the land

have installed efficient drainage systems to assist the natural delivery of water to creeks, streams and rivers.

▲ The recent intensification of agricultural activity and of settlement means that at times too many nutrients and too much sediment is being carried off the land.

▲ The negative effects which result have now reached a level where more action needs to be taken to reduce the known and increasing risks to freshwater quality and quantity, and to comply with the National Objectives Framework within the National Policy Statement on Freshwater Management.

▲ The economy in Southland is based on rural production and servicing, tourism, energy

production and industrial processing. To be sustainable, the natural resources which underpin these activities need to be sustainably managed.

▲ It has been established that health outcomes for vulnerable people are reduced when winter air quality in closely settled communities is managed by clean heat options.

▲ We need to deal with both the cause and effect of any discharge. If discharges have an immediate adverse effect on natural and/or human life, a response is required immediately. Other discharges can have cumulative issues that arise over time.

Key Results from the Year ▲ Ongoing incremental improvements in water quality overall. ▲ Crucial support put in place to support community efforts to improve air quality. ▲ Science knowledge about linkages between land and water more fully understood. ▲ Southland Water and Land Plan notified and submissions sought from the community.

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Achieved 1

Not Achieved

9

For the Issue 1 targets -

What we were aiming to do and how successful we were …

How much did we spend on this Issue in 2015/16?

Level of Service

Measures Baseline Measure (2010/11)

Performance Targets 2015/16

Results for 2015/16

Implement the National Policy Statement for Freshwater Management

Produce implementation programme, and nutrients limits and sediment load limits for 5 freshwater management units /catchments

No baseline measure required.

Adopt and release a NPSFM implementation programme via the 2015-2025 Long-term Plan by 31 December 2015.

Achieved NPSFM Implementation Programme approved for notification at the 11 November 2015 Council meeting. Publicly notified on Saturday, 28 November 2015.

Incorporate provisions to address adverse effects of non-point source discharges into Regional Water and Land Plan

No baseline measure required.

Notify the Regional Water and Land Plan incorporating the changes by 31 December 2015.

Not Achieved … but progress was made. The Proposed Southland Southland Water and Land Plan was publicly notified on Friday, 3 June 2016.

Improving water quality

Monitoring sites show an improving regional trend (whether significant or indicative) for human health attributes contained in the NPSFM and for ecosystem health attributes contained in the NPSFM.

New measure. All monitoring sites meet the national bottom lines for ecosystem health contained in the NPSFM in September 2014 for attributes that we have sufficient monitoring data for. Attribute states have been assigned for each monitoring site to enable water quality maintenance and improvement to be tracked.

All monitoring to show that:

the national bottom lines for ecosystem health contained in the NPSFM are met; and

the attributes for ecosystem health contained in Appendix 2 of the NPSFM (or listed in a regional plan as part of a process to give effect to the NPSFM) remain in their current attribute state (band) or improve.

Not Achieved … but progress was made. There are improving trends across the region from a system that was under stress. Significant improvement is going to take a long time, but at this stage it is too early to say there is compliance with the national bottom lines for ecosystem health, as some parameters require several years of data before they can be reported on. For example, the bottom line for periphyton requires 3 years of data. As Environment Southland only commenced monthly monitoring of this parameter in late 2014, it will be late 2017 before we can formally report compliance with this bottom line. In addition, compliance with the national bottom lines for the period July 2009 to June 2014 was reported in the October 2015 publication “Water Quality in Southland”, www.es.govt.nz/wq-southland, which was produced to coincide with the consultation period for the draft Southland Water and Land Plan and inform this. Water quality state and trend information is hosted on the Land Air Water Aotearoa (LAWA)

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Level of Service



Results for 2015/16

website www.lawa.org.nz.

Respond to all reported pollution incidents that could have a negative effect on water within Council’s specified timeframes

1. All high priority reported pollution incidents are physically responded to within either 1, 4 or 24 hours according to required response timeframe.

2. All medium priority reported pollution incidents are physically responded to within either 2 days, 1 week or 2 weeks according to required response timeframe.

3. All low priority reported pollution incidents are physically responded to when resources permit.

High Priority Incidents: 39% Medium Priority Incidents: 55% Note: Low priority incidents will not be reported on.

100%

100%

Not Achieved … but progress was made.

A spot audit of annual incidents was conducted. It revealed that the following percentages of incidents were attended to within timeframes:

High Priority: 93% Medium Priority: 93%

Provision of advice, education and assistance to the community encouraging uptake of good management practices

Number of focus activity farm plans completed – goal is 200 per annum.

New measure Baseline will be measured in 2015/16

≥200 focus activity farm plans completed


160 Focus Activity Farm Plans (covering 53,510 ha) were completed. This was less than the performance target due to involvement with the Water and Land engagement process and the velvetleaf response, but on a per hectare basis we covered a much larger area than we had planned

Protect community health from adverse environmental effects

Contact recreation: Exceedances of National Bathing Guidelines (Marine and Freshwater) at established monitoring sites during summer (October to March)

No exceedances (Marine). Freshwater areas met the bathing guidelines in 63.9% of samples.

Nil exceedances.

Water quality at established freshwater bathing monitoring sites during summer (October to March) meets the bathing guidelines in ≥90% of samples by 2022. Notes: Natural events preclude a target at 100% being achievable. Targets to be reached by response concentrating on:

changing the policy framework addressing intensive land use and water quality standards;

undertaking compliance inspections and education concentrating on high risk areas; and

responding to reported pollution incidents by concentrating on high priority incidents, followed by medium priority incidents.


Five marine sites were found to meet the overall “very good” suitability for recreational grade. Two marine sites exceeded the “Yellow Alert” level of 140 MPN/100 ml Enterococci (15% of all marine sites). Two of the 194 samples taken exceeded “Yellow Alert” level (1% of all samples). There were no “Red Alert” exceedances for the marine sites tested (>280 MPN/100 ml Enterococci). All glacial lakes monitored were found to meet the overall “very good” suitability for recreational grade.

Seven of the nine freshwater sites exceeded the “Yellow Alert” level of 260 MPN/100 ml E.Coli (78% of all freshwater sites). Six of the nine sites returned levels >550 MPN/100 ml E.Coli and therefore exceeded the “Red Alert” level (67% of all freshwater sites). 34 of the 141 freshwater samples collected exceeded “Yellow Alert” (24% of all samples), and 16 exceeded “Red Alert” status (11% of all samples).

The worst sites were: • Waikaia River at Waikaia (3 red

Page 16 Page 16

Level of Service



Results for 2015/16

alerts and 8 yellow); • Aparima River at Thornbury

(2 red alerts and 6 yellow); • Oreti River at Wallacetown

(2 red alerts and 1 yellow); • Mataura River at Gore (3 red

alerts and 7 yellow); • Mataura River at Riversdale

Bridge 300 m downstream (5 red alerts and 3 yellow);

• Waiau River at Tuatapere (1 red alert and 2 yellow).

Mahinga Kai: Exceedances of National Shellfish Gathering Guidelines at monitored recreational shellfish harvesting sites

6 of 8 monitored shellfish gathering sites exceeded guidelines.

Nil exceedances. Note: Targets to be reached by response concentrating on:




Not Achieved Eight shellfish gathering sites were monitored monthly for levels of Faecal Coliforms (cfu). Five of those eight sites exceeded the “Red Alert” trigger level of 400 cfu/100 ml on at least one occasion (63% of all sites). These sites were Toetoes Harbour at Fortrose, New River Estuary at Mokomoko Inlet, Monkey Island at Frentz Road, Colac Bay at Bungalow Hill Road and Jacobs River Estuary downstream of the Fish Co-operative. In total, 108 samples were collected and processed at Hills Laboratory. Nine of those 108 samples exceeded the “Red Alert” trigger level of 400 cfu/100 ml (8% of all samples). The worse sites were Toetoes Harbour at Fortrose and Jacobs River Estuary downstream of the Fish Co-operative, both of which exceeded 400 cfu/100 ml on three occasions.

Groundwater: Exceedances of National Drinking Water Standards in groundwater (excluding aquifers where ambient water quality naturally exceeds guidelines).

10% of bores sampled had a nitrate-nitrogen concentration that exceeded the drinking water standards. 14% of bores sampled had bacteria levels which exceeded the drinking water standards.

Exceedances in less than 10% of bores sampled. Note: Targets to be reached by response concentrating on:




Not Achieved … but progress was made. While the numbers of exceedances have remained relatively static for nitrate over the last three years, some progress have been made in reducing numbers of exceedances in E.coli. This is likely due to campaigning to increase awareness around the importance of adequate well-head protection.

29 bores were sampled quarterly as a part of the Groundwater State of the Environment network. An additional bore was sampled monthly as part of an agreement with Gore District Council to monitor Gore’s drinking water. Seven of the 30 sites exceeded drinking water standards for E.Coli on at least one occasion (23% of all sites). Four of the 30 sites exceeded drinking water standards for Nitrogen-Nitrate on at least one occasion (13% of all sites). A total of 119 samples were taken and processed at Hills Laboratory.

Page 17 Page 17

Level of Service



Results for 2015/16

Ten of those 119 samples exceeded drinking water standards for E.Coli (8% of samples). Sixteen of the 119 samples exceeded drinking water standards for Nitrogen–Nitrate (13% of all samples).

Air Quality: Breaches of the National Environmental Standards (Air Quality) for levels of particulate matter (PM10) in specified locations.

In winter 2011 (1 May-31 August), there were a total of:

13 exceedances reported in the Invercargill airshed;

4 exceedances reported in the Gore airshed.

As per baseline or better Not Achieved In winter 2015 (1 May–31 August), there were a total of: • 8 exceedances in the Invercargill

airshed (and 3 exceedances outside this winter period);

• 2 exceedances in the Gore airshed.

Monitoring is undertaken in the airsheds to meet the requirements of the National Environmental Standards for Air Quality (NESAQ) and for reporting to the Ministry for the Environment and the community. While the number of exceedances is an improvement on the baseline measure, a significant reduction is still needed to achieve the NESAQ targets of no more than 3 exceedances for Invercargill and no more than 1 exceedance for Gore by 1 September 2016. The Environmental Information Division will continue to work with the Policy and Communications Teams to address these exceedances. Education and behaviour change initiatives will assist in reducing the number of exceedances, alongside the regulations that have been implemented.

Protect the environment from pollution arising from unauthorised discharges.

Compliance with legislation, regional rules and consent conditions, particularly those with permitted activity status.

Note: There is no baseline measure for permitted activity inspections because previous permitted activities data cannot be separated out from other pollution incidents. 14% for dairy discharge consents Note: There is no baseline measure for other activity type including permitted activity re-inspections because data not collated.

100% compliance with legislation, regional rules and consent conditions, including those with permitted activity status. No re-inspections required for consented significant non-compliant activities. Note: Targets to be reached by response concentrating on high risk areas.

Not Achieved There have been 26 infringements notices, 14 formal warnings and 12 abatement notices issued. There have been 24 (1.7%) significant non-compliant from a total of 1,411 inspections.

Notes: 1. The performance target for the improvement in water quality has a time horizon of 31 January 2020. Progress will be measured and reported annually. 2. The performance targets elsewhere in the performance management framework are for each year of the Long-term Plan.

Page 18 Page 18

LTP Actual Actual Annual Plan LTP

2014/15 2014/15 2015/16 2015/16 2015/16



851 951 Targeted rates 1,478 1,478 1,478


861 1,004 Fees and charges 1,969 2,650 2,650

0 0 Internal Charges and overheads recovered 0 0 0

1,446 1,996 Local authorities fuel tax, fines, infringement fees and other receipts 2,760 1,859 1,859





2,571 2,885 Internal Charges and overheads recovered 2,444 2,560 2,560

0 0 Other operating funding applications 0 0 0


(2,473) (2,999) Surplus/(deficit) of operating funding (2,658) (3,108) (3,108)









Capital expenditure

0 225 - to meet additional demand 292 200 200


0 92 - to replace existing assets 75 303 303

(1,866) (2,974) Increase/(decrease) in Reserves (609) (2,456) (2,456)

(608) (431) Increase/(decrease) in Investments (2,499) (1,256) (1,256)

(2,473) (2,999) Total applications of capital funding (2,658) (3,028) (3,028)

2,473 2,999 Surplus/(deficit) of capital funding 2,658 3,108 3,108

(0) 0 Funding Balance 0 0 0


Funding Impact Statement - Providing for management of Southland's sustainability

Page 19

2. Enabling Resource Use by Communities, Businesses

and Individuals

What are the community outcomes we seek?

▲ Southland’s water resources

are available for use in a way which protects cultural, aesthetic, recreational and natural values.

▲ Instream values and fish and wildlife habitats are protected at habitat sustaining levels, given the underlying natural physical conditions of the catchment.

▲ The short and long-term effects of resource use on the region’s waters and associated ecosystems are understood and adverse effects are addressed in a timely manner.

▲ The community is sure that uses of water, including discharges into water, land, coastal water and discharges to air do not contravene agreed standards that seek to minimise adverse effects.

▲ The community takes an active role in, and responsibility for, water resources.

▲ The community’s requirement for gravel is met in the short and long-term with minimal environmental effects, and by enhancing, whenever possible, the community’s recreational opportunities and biodiversity gains.

▲ The land transport system meets community needs, is safe and efficient, and minimises adverse effects on the environment.

▲ A Passenger Transport Transfer Agreement is in place with the Invercargill City Council to enable availability of a public transport system to assist everyone to fully partake in the community’s activities. This Agreement may need to be updated within the next three years to recognise legislative changes.

What is the key issue?

Wealth creation using the natural capital of the region may be measured in terms of employment, business profitability, asset growth and debt reduction. Those are measures of private wealth. In addition to the contribution this makes to the communities’ environmental interests, the region needs to allow natural resource use within sustainable limits so that social, cultural and environmental interests of all the community are also maintained and enhanced. A fair and accountable process of allocation of the resources is required, which looks at the sustainability of the usage of resources and the management of any negative environmental effects that usage may incur so that wealth in all its senses is delivered, both today and to future generations.

Why is it an issue for the Southland region? ▲ The Resource Management

Act charges the Regional Council with the

responsibility to manage the impact of natural resource use.

▲ Land and resource use intensification has increased demand for water.

▲ The economy in Southland has seen a major shift in agricultural activity into dairy and dairy support.

▲ Use for agricultural wash down, stock drinking water and irrigation now competes with the retention of water availability for recreational uses, and with urban and business purposes, particularly in extended dry periods.

Over application of fertilisers, forest harvesting and intensive farming can have an impact on the quality of soils causing erosion which then has a negative impact on our land (production of soils), on our freshwater quality and quantity, and subsequently on our estuaries. Responding to the requirements of the National Policy Statement on Freshwater Management will address the causes and enable the resources to be used within sustainable limits. That shift in addition to established patterns of economic activity and settlement has been accompanied by a reduction in quality of water and pressure on the availability of water.

Page 20 Page 20

Achieved 2


Future Challenges

Continuing water quality improvement

Impacts of climate change Efficiently and effectively dealing with decision and

appeal processes

South Island-wide collaborative transport

planning

Key Results from the Year ▲ Collaborative processes put in place for transport planning at inter-region and South Island levels. ▲ Resource consents processed in a timely manner. ▲ Number of appeals to the Environment Court resolved through mediation process.



Level of Service



Results for 2015/16

Resource consent applications are processed within the statutory timeframes.

Percentage of applications processed within the statutory timeframes

92%

≥93% for all consents

Achieved 97.9% within statutory timeframes for the period 1 July 2015 – 30 June 2016.

Provision of effective regional plans

Number of decisions overruled in Environment Court as a result of a flaw or discrepancy in a regional plan.

No decisions overruled

No decisions overruled Achieved The proposed Regional Policy Statement 2012 had 18 appeals in total lodged against Council’s decisions, including nine on biodiversity. No appeals would be considered to be the result of any legal flaw or discrepancy. A considerable number of the appeal points have been successfully mediated. One appeal on the Air Plan was received but it was not as a result of a legal flaw or discrepancy. We have two consent decisions that are undergoing mediation/ awaiting Environment Court proceedings. Neither is due to flaw or discrepancy in a regional plan.

Page 21 Page 21


2014/15 2014/15 2015/16 2015/16 2015/16


759 1,128 General rates, uniform annual charges, rates penalties 354 312 312

0 0 Targeted rates 0 0 0


3,817 3,587 Fees and charges 1,634 1,980 1,980


248 573 Local authorities fuel tax, fines, infringement fees and other receipts 177 129 129





948 (116) Internal Charges and overheads recovered 738 893 893



389 1,299 Surplus/(deficit) of operating funding (74) (16) (16)









Capital expenditure




441 1,361 Increase/(decrease) in Reserves 223 41 41

(51) (62) Increase/(decrease) in Investments (313) (120) (120)

389 1,299 Total applications of capital funding (74) 6 6

(389) (1,299) Surplus/(deficit) of capital funding 74 16 16

(0) (0) Funding Balance 0 (0) 0


Funding Impact Statement - Enablement of resource use by communities, industries and individuals

Page 22 Page 22

Future Challenges

Continuing improvement of the emergency management & warning

systems Impacts of climate change

Responding to range of natural hazards

3. Emergency Response and Preparedness

What are the community outcomes we seek? ▲ The farming community,

industry, urban and rural communities and other floodplain users take timely action to minimise the effects of flooding on their activities and reduce the threat to life and property and the environment.

▲ To support the joint regional emergency management framework.

▲ To help people to prepare for emergencies and build their capacity to effectively respond to and recover quickly from these events. Council also has systems and processes in place to help co-ordinate and restore a safe, healthy and accessible built environment.

▲ To develop and maintain policy direction within the provisions of the Resource Management Act (1991) and direction from Maritime New Zealand for the protection and minimisation of environmental effects from activities within the coastal environment and to provide for harbour safety.

What is the key issue? When an emergency occurs, the usual pattern of life is disrupted and new challenges are created for personal safety and wellbeing, for property and for community functioning. The Canterbury earthquakes have raised greater awareness of the possible extent of challenges that can present themselves during and following a major event. The community will expect an organised, co-ordinated, effective and fit for purpose response in any lead up to, during and after an emergency. Emergency may be defined as a condition of urgent need for action or assistance. Our preparedness is for natural emergencies, some of which if major (like earthquakes and tsunamis) can cause damage which, if occurs quickly the response is more about the recovery after the event. In other natural emergencies, like the effects of prolonged or heavy rain causing flooding, the response is more about community coping during and immediately after the event. In addition, we are the first responders to the environmental effects of any marine oil spills and are likely to

be involved in any biosecurity emergency such as foot and mouth disease. Why is emergency response and preparedness a key issue for the Southland region?

The nature of Southland’s geography means that much of the urban settlement and farmland is at risk from flood or tidal inundation when extreme weather or seismic events occur. While community-based flood protection schemes are designed to withstand historic levels of flooding and new sites in floodplains can have risk lessened by high enough building platforms, the prospect of any higher or faster flows than previous means all flood protection is at risk of failure. The flood schemes maintained by Environment Southland protect property, lives and livelihoods. In urban areas they protect homes, businesses and infrastructure while the rural schemes protect the land and property outside the stopbanks. In addition, there is a need to forecast the likelihood of flooding so livestock (and stock feed stores like baleage) may be shifted out of the path of rising waters.

Key Results from the Year ▲ Improved assessment of our emergency management capability. ▲ Southland households’ preparedness for an emergency improves slightly.

Page 23 Page 23

Achieved 3




Level of Service



Results for 2015/16

Ensure the region is resilient and able (through the 4Rs of reduction, readiness, response and recovery) to cope with any civil defence emergencies.

Overall score from the Ministry of Civil Defence Emergency Management assessment of the Southland Civil Defence Emergency Management Group’s capability (five yearly assessment).

71% (September 2011)

(Note: New measure 2015/16)

As per baseline or better Achieved 74.2% in the 2015 assessment. (A slightly different methodology was used to the previous assessment. The comparison score with 2011 was 76.3%) The MCDEM assessment is usually carried out every 3 years, however, it was delayed until 2015 due to the Christchurch earthquakes.

Percentage of surveyed households prepared for an emergency including self-sufficiency for 3 days.

47% (2011) (Note: New measure

2015/16)

As per baseline or better Achieved 51% (2015/16 ES survey).

Flood warning Percentage of time that the flood warning network (real time telemetered rainfall and river level sites) is operational.

98% 100% Achieved Five flood warning events occurred (15 August, 17 October, 17 December, 16 May and 23-24 May). The flood warning network was 100% operational during this time.

Page 24 Page 24


2014/15 2014/15 2015/16 2015/16 2015/16


726 371 General rates, uniform annual charges, rates penalties 336 388 388



2,407 2,425 Fees and charges 1,973 2,544 2,544





1,586 1,057 Payments to staff and suppliers 545 1,456 1,456


445 1,085 Internal Charges and overheads recovered 745 390 390



1,334 836 Surplus/(deficit) of operating funding 1,182 1,244 1,244









Capital expenditure




1,426 690 Increase/(decrease) in Reserves 1,360 1,344 1,344

(92) 101 Increase/(decrease) in Investments (216) (124) (124)

1,334 836 Total applications of capital funding 1,182 1,260 1,260

(1,334) (836) Surplus/(deficit) of capital funding (1,182) (1,244) (1,244)

(0) 0 Funding Balance 0 (0) 0


Funding Impact Statement - Emergency response and preparedness

Page 25 Page 25

What is velvetleaf?

•A pest plant established overseas and not wanted in New Zealand

•One of the world’s worst cropping weeds

•Out-competes crops for water, space and nutrients

•Seeds last in the ground for up to 60 years

An enormous job

•Environment Southland led a local response over eight weeks on behalf of the Ministry for Primary Industries

•MPI had identified several seed lines known to be contaminated with velvetleaf

•Activating the Emergency Operations Centre became crucial to the operation’s success

•Teams searched nearly 4,500 hectares and found 199 plants

•Costs in order of $700,000

Disruption to Council’s activities

•Major disruption across the Council with resulting impacts on achievements levels for various projects and programmes

•Some 6,840 Council staff hours over a three month period which would have otherwise been spent on the approved programmes and projects for the year

4(a). Services – Biodiversity and Biosecurity

What are the agreed community outcomes we seek? ▲ Pest animals and plants

that threaten the environment and economy in the region are identified and an appropriate management framework to minimise threats is in place.

▲ Landowners and marine users (e.g. aquaculture) are protected from the spread, environmental and economic effects of specific pest animals and plants and new pest animals and plants do not become established.

▲ Unique terrestrial and marine biodiversity of the region is treasured and enhanced.

▲ Develop and implement a Marine Pathway Management Plan to prevent spread of marine pests in Fiordland.

What is the key issue?

We need to provide and maintain services to ensure potential risks to our community are avoided or minimised.

Such services include the: ▲ co-ordination of activity to

reduce the impact of pests; ▲ encouragement of activities of

individuals, agencies and community groups leading to the maintenance and

enhancement of biological diversity.

Why is it an issue for the Southland region?

▲ Pests are no respecters of

property boundaries. ▲ Individual land occupiers are

assigned the responsibility, but there is a need to retain specialist knowledge for removal of pests, and inspection against Regional Pest Management Plan responsibilities.

▲ Allowing pockets of infestation from which new infestations spring is to be avoided.

▲ Control of numbers means biodiversity is maintained and pest populations are unlikely to multiply rapidly.

The velvetleaf incursion

Page 26

Achieved 4

For the Issue 4a targets -

Future Challenges

Continuing improvement of the pest management systems and processes

Impacts of climate change and impacts on biodiversiy

Responding to pest incursions into the region

Key Results from the Year ▲ Pest management plans for land and marine areas commenced. ▲ New biodiversity co-ordinator sought.



Level of Service



Results for 2015/16

Minimise the adverse impacts of pests plants and animals as identified in the Regional Pest Management Plan and Marine Pathways Plan

Number of exclusion pest incursions in terrestrial or marine areas.

No exclusion pests (i.e. pests which could cause serious adverse impacts on the Southland environment if they did arrive here) found within the region.

No exclusion pests found. Achieved No exclusion pests reported. (Note: Velvetleaf is not an exclusion plant)

Level of rabbit populations in rabbit prone areas.

One site was in excess of McLean Scale 3.

Achieve McLean Scale 3 or below at all monitored sites.

Achieved One property under ongoing surveillance.

Level of possum populations in Possum Control Areas.

Five possum control areas established in former Tb vector management areas.

Monitor five possum control areas to ensure possum population levels are reducing.

Achieved Seven new PCAs established for a total of 53,000 ha. Three post monitors completed – two required rework. Three year rolling monitoring planned for all PCAs. Wax tag monitoring method being assessed for future use.

Maintaining regional biodiversity

Council and regional biodiversity protection/enhancement programmes are aligned and co-ordinated.

New measure Baseline measure to be developed from 2015/16 monitoring.

Develop and implement an integrated biodiversity protection and enhancement plan for ES biodiversity related activities, including leasehold properties.

Achieved Environment Southland Biodiversity Operational Strategy has been prepared and co-ordination of in-house and development of external biodiversity activities are being implemented. A new Biodiversity Programme Leader has been recruited.

Page 27


2014/15 2014/15 2015/16 2015/16 2015/16



2,849 2,623 Targeted rates 2,186 2,186 2,186


219 478 Fees and charges 704 91 91


1,033 989 Local authorities fuel tax, fines, infringement fees and other receipts 999 970 970








576 466 Surplus/(deficit) of operating funding (343) (477) (477)









Capital expenditure




579 (26) Increase/(decrease) in Reserves 63 (453) (453)


576 481 Total applications of capital funding (321) (462) (462)

(576) (466) Surplus/(deficit) of capital funding 343 477 477

0 (0) Funding Balance (0) 0 (0)


Funding Impact Statement - Services

Page 28

Future Challenges

Continuing repair and maintenance of the community protection

schemes Impacts of climate change

Responding to range of natural hazards

4(b). Services – Flood Protection and Control Works

What are the agreed community outcomes we seek? ▲ The farming community,

industry, urban and rural communities and other floodplain users:

are assured of the standard of protection received from flood protection schemes;

make informed decisions on floodplain development;

take timely action to minimise the effects of flooding of their activities and reduce the threat to life and property and the environment.

▲ To enhance the network of walkways/cycleways within the Southland region by working with other organisations to determine future coastal walkway/cycleway construction.

What is the key issue? We need to provide and maintain services to ensure potential risks to our community are avoided or minimised. Such services include the: ▲ management of river

protection works and sustainable gravel extraction;

▲ co-ordination of community drainage outfall maintenance schemes;

▲ provision of information to communities and individuals.

Why is it an issue for the Southland region? ▲ River management needs

knowledge, skill and experience, and a whole-of-system management approach is required because of the interconnectedness of the catchment.

▲ Community has asked for a co-ordinated approach to drainage maintenance so efficient outfall is maintained.

Key Results from the Year ▲ Only maintenance and repairs to the community protection schemes were required during the year. ▲ Drainage schemes inspected and maintained to keep outfall integrity. ▲ Discussions with the Gore and Mataura communities on investigation options for additional urban

protection.

Page 29 Page 29

Achieved 2

For the Issue 4b targets -



Level of Service


Performance Targets 2015/16 Results for 2015/16

Reduce the flood risk to people and property by retaining system adequacy and maintenance of flood protection works to agreed standards.

The major flood protection and control works are maintained, repaired and renewed to the key standards defined in the Council’s asset management plans.

All major flood protection and control schemes meet their full service potential.

Maintenance - Our stopbanks are maintained to their original constructed standard:

Location Key standard Garston, Eyre Creek, Athol, Thornbury

<10 yr return period1 with freeboard2

Gore, Mataura, Wyndham, Yellow Bluffs (Otautau), Tuatapere

60 yr return period with freeboard

Cattle Flat, Lower Mataura, Wallacetown

<20 yr return period with freeboard

Waikaia <5 yr return period with freeboard

Lumsden cableway

17 yr return period with freeboard

Invercargill, Oreti Districts (between Wallacetown & Lumsden)

To protect against a January 1984 size flood event

Repaired – Flood damage identified, prioritised and a repair programme agreed with the community. High priority works undertaken as soon as possible.

Renewed – Reconstruct floodbank(s) to restore the key standard flood control level(s), where required.

Achieved

669.1km of scheduled stopbank and seven dam inspections completed for Oreti, Te Anau and Aparima rural protection and Invercargill, Otautau, Tuatapere, Gore, Mataura and Wyndham urban protection. All minor deficiencies identified in the inspection programme, scheduled for repair in calendar year. Ongoing analysis of channel capacity, level of protection and risk assessment. Meeting of Gore District Council and Environment Southland working group to progress findings and options for increased protection for Gore and Mataura Towns on 18 August 2015. No renewal/reconstruction was required or undertaken in 2015/16.

Improve the productive capability of land by maintaining land drainage works to agreed standards.

Council-maintained land drainage schemes perform to agreed standards.

No failures of drainage schemes occurred.

All outfall or bank stability issues arising from pre-works inspections are resolved by that year’s maintenance drainage works programme.

Achieved

The inspection regime associated with Council-maintained drainage schemes resulted in 701 km of scheduled inspection completed.

Inspections resulted in maintenance work being completed over 334 km.

No failure of drainage schemes occurred.

1 “Return period” The probability that events such as floods, wind storms or tornadoes will occur is often expressed as a return period. The inverse

of probability (generally expressed in %), gives the estimated time interval between events of a similar size or intensity. For example, the return period of a flood might be 100 years; otherwise expressed as its probability of occurring being 1/100, or 1% in any one year. 2 “Freeboard” is a term used to describe a factor of safety above a design flood level for flood mitigation works. Freeboard allows for the uncertainties

in hydrological predictions, wave action, modelling accuracy, topographical accuracy, final flood defence levels and the quality of the digital elevation models. The increase in flood levels associated with climate change is in addition to freeboard, because the uncertainty freeboard incorporates remains in future climate scenarios. Therefore, freeboard should not contain the “core” component of climate change impacts, but it may be increased to account for climate change uncertainties.

Page 30 Page 30


2014/15 2014/15 2015/16 2015/16 2015/16



2,971 3,075 Targeted rates 3,422 3,430 3,430


494 957 Fees and charges 1,125 499 499










(123) (160) Surplus/(deficit) of operating funding 564 39 39









Capital expenditure




(94) (508) Increase/(decrease) in Reserves 1,210 281 281


(123) (149) Total applications of capital funding 564 53 53

123 160 Surplus/(deficit) of capital funding (564) (39) (39)

0 (0) Funding Balance 0 (0) 0


Funding Impact Statement - Services - flood protection and control works

Page 31 Page 31

5. Community Representation and Communication

What are the community outcomes we seek? ▲ The community is

empowered and encouraged to make decisions about the use of natural capital and ecosystems to protect its economic viability and minimise on-site and downstream adverse effects on land and water resources.

▲ The community’s interest is represented and individual constituents are assisted by sound decision-making.

▲ Quality stewardship of Environment Southland’s reputation and assets.

What is the key issue? The purpose of local government is: ▲ to enable democratic local

decision-making and action by, and on behalf of, communities; and

▲ to promote the social, economic, environmental and cultural interests of communities, in the present and in the future.

What is the key issue for Southland? There are significant economic changes occurring in the use of natural resources within the Southland region. Intensification of land use is the catch-all description for activity like dairy farming, dairy support (e.g. winter grazing, provision of feed), hill country development and other changing land uses arising, for example, from irrigation. The changes are having environmental, social, economic and cultural effects. The work of the Council is mandated by the Local

Government Act 2002. The following principles relating to local authorities are contained in Section 14 of the Act and the oversight of the business of the Council is delivered in accordance with the principles: In performing its role, a local authority must act in accordance with the following principles: (a) a local authority should:

▲ conduct its business in an open, transparent, and democratically accountable manner; and

▲ give effect to its identified priorities and desired outcomes in an efficient and effective manner;

(b) a local authority should

make itself aware of, and should have regard to, the views of all its communities;

(c) when making a decision, a

local authority should take account of: ▲ the diversity of the

community and the community’s interests, within its district or region;

▲ the interests of future as well as current communities; and

▲ the likely impact of any decision on the interests referred to in the preceding bullet points;

(d) a local authority should

provide opportunities for Maori to contribute to its decision-making processes;

(e) a local authority should

actively seek to collaborate and co-operate with other local authorities and bodies to improve the

effectiveness and efficiency with which it achieves its priorities and desired outcomes;

(f) a local authority should

undertake any commercial transactions in accordance with sound business practices;

(fa) a local authority should

periodically: ▲ assess the expected

returns to the authority from investing in, or undertaking, a commercial activity; and

▲ satisfy itself that the expected returns are likely to outweigh the risks inherent in the investment or activity;

(g) a local authority should

ensure prudent stewardship and the efficient and effective use of its resources in the interests of its district or region, including by planning effectively for the future management of its assets; and

(h) in taking a sustainable

development approach, a local authority should take into account: ▲ the social, economic,

and cultural interests of people and communities;

▲ the need to maintain and enhance the quality of the environment; and

▲ the reasonably foreseeable needs of future generations.

Page 32 Page 32

Achieved 2

Not Achieved

1


Future Challenges

Continuing improvement in the way our messaging is undertaken

Improved social licence from the community to the way we operate

Responding to the varience in the population demographics in the

region

Key Results from the Year ▲ Ongoing efforts in strengthening levels of recognition of Environment Southland’s work. ▲ Adapting the way the Council engages with its community to discuss issues of the day. ▲ A greater level of understanding within the community of the issues that the region faces.



Level of Service



Results for 2015/16

We will provide quality stewardship of Environment Southland’s functions through robust decision-making and public awareness.

Percentage of respondents who name Environment Southland as the authority responsible for managing Southland’s natural resources.

76% ≥90% Achieved The perceptions survey is carried out at the end of each financial year, and reflects back on the year just gone. 2014/15 results (for comparison)

Residents 83%

Farmers 92% 2015/16 results* Prompted

Residents 99%

Farmers 99% Unprompted

Residents 71%

Farmers 87%

Percentage of respondents who believe Environment Southland is managing water quality issues well or very well.

27% ≥35%

Achieved 2014/15 results (for comparison):

Residents 56%

Farmers 67% 2015/16 results

Residents 44%

Farmers 46% While these results are an overall reduction from last year, the research company suggests that awareness “spiked” in 2015, and

Page 33 Page 33

Level of Service



Results for 2015/16

the drop for 2016 is a return to expected levels. Reductions from last year may also be partly explained by including online interviewing for the first time, attracting a greater number of young people who are not ratepayers.

Percentage of respondents agreed or strongly agreed that Environment Southland was effectively managing pressing environmental issues.

57% ≥60% Not Achieved 2014/15 results (for comparison):

Residents 60%

Farmers 60% 2015/16 results:

Residents 50%

Farmers 43% While these results are an overall reduction from last year, the research company suggests that awareness “spiked” in 2015, and the drop for 2016 is a return to expected levels. Reductions from last year may also be partly explained by including online interviewing for the first time, attracting a greater number of young people who are not ratepayers. Contrasting with these results is the positive feedback received for Environment Southland’s role in the velvetleaf response and with the approximately 900 submissions received on the proposed Southland Water and Land Plan, particularly in regard to farmers’ perceptions. Positively, the report says that for farmers, “measures about being informed and having an opportunity to participate in decision making remain strong, and results relating to the credibility [of] Environment Southland’s information remain similar to last year”.

*Change in the way the questions were asked between the two survey years.

Page 34 Page 34


2014/15 2014/15 2015/16 2015/16 2015/16





138 14 Fees and charges 109 11 11







632 1,119 Internal Charges and overheads recovered 874 689 689



(287) (413) Surplus/(deficit) of operating funding (251) (257) (257)









Capital expenditure

0 1,289 - to meet additional demand 14 0 0



(64) (1,578) Increase/(decrease) in Reserves 306 132 132

(222) (436) Increase/(decrease) in Investments (662) (401) (401)

(287) (410) Total applications of capital funding (251) (255) (255)

287 413 Surplus/(deficit) of capital funding 251 257 257

(0) 0 Funding Balance (0) (0) 0


Funding Impact Statement - Community representation and communication

Page 35 Page 35

Report on Long-term Plan and Policies Revenue and Financing Policy All activities were funded according to the Revenue and Financing Policy. Variations from the public/private percentage allocations in the Revenue and Financing Policy did occur, as set out below:

(i) Where goods and services which have a clear value to identifiable persons have been provided, these have

been charged directly, resulting in more private funding. (ii) Where costs have varied from budget, but the funding source is fixed (e.g. rates), the percentage allocations

will be different. (iii) Where insufficient private funding has been obtained, the balance has been funded from general funds, or

where extra funding has become available, the general funds requirement has reduced.

Activities Reason

(see

below)

Public Private Public Private

Environmental Monitoring (i) 96% 4% 100% 0%

Environmental Education (i) 94% 6% 100% 0%

Hazard Mitigation (i) 50% 50% 100% 0%

Regional Planning (i) 60% 40% 100% 0%

River Management (ii) 24% 76% 30% 70%

Consent Processing (iii) 28% 72% 25% 75%

Consent Compliance (i) 25% 75% 50% 50%

Community Representation (i) 93% 7% 100% 0%

Council Policy & Planning Analysis (i) 60% 40% 100% 0%

Catchment Planning (iii) 52% 48% 60% 40%

Land Sustainability (ii) 9% 91% 16% 84%

(i)

(ii)

(iii)

Revenue and Financing Policy

All activities were funded according to the Revenue and Financing Policy. Some minor variations from the

public/private percentage allocations in the Revenue and Financing Policy did occur, as set out below:

Where goods and services which have a clear value to identifiable persons have been provided, these have

been charged directly, resulting in more private funding.

Where costs have varied from budget, but the funding source is fixed (e.g. rates), the percentage

allocations will be different.

Where insufficient funding has been obtained, the balance has been funded from, general funds, or where

extra funding has become available, the general funds requirement has reduced.

Actual Funding

Allocation

Proposed Funding

Allocation

Page 36 Page 36

Investment Policy ▲ Short term funds managed by finance division to be:

Invested for no longer than 12 months

If funds invested in one institution exceed $0.5 million, a maximum of 50% of funds in any one institution

Invested with approved parties Performance target met.

▲ Longer term fixed interest funds managed by funds managers to be:

Minimum 50% of portfolio in government stock

Maximum 25% of portfolio in local authority stock

Maximum 25% of portfolio in corporate bonds

Maximum in any one security other than government stock should be 5% of portfolio

Invest in corporate securities rated at least A- for bonds more than 1 year, or A1 for those less than 1 year

Portfolio duration compared to CS First Boston indices should be within the range of minus one year to plus 0.5 years Performance target met.

▲ Longer term equity investments managed by fund managers to be:

up to 100% of the fund in equities

initial aim to be up to 50% international equity

up to 50% Australian and New Zealand equities

remainder in bonds, capital protected notes, or cash management facilities. Performance target met.

▲ Monitor holding in South Port, with a full review every 3 years Performance target met. The holding in South Port is monitored through the South Port Sub-committee.

Regular briefings are held with the Chairman of Directors and Chief Executive, as and when announcements are made by the company to the Stock Exchange.

▲ Review property portfolio annually

Performance target met. The property portfolio is reviewed annually as part of the annual planning process. Land held as part of a floodway scheme cannot be sold while it is part of a flood scheme.

▲ Comply with procedures in Investment Policy Performance target met.

Liability Management Policy The following prudential limits apply in the policy: ▲ Proportion of borrowing due for repayment in any one year should be no more than the larger of 25% of total borrowings or

$100,000. Performance target met. No borrowings. Council’s overdraft is seasonal, not long-term borrowings.

▲ The maximum level of borrowing will not exceed 35% of total operational assets

Performance target met. The debt outstanding at 30 June 2016 is Nil. ▲ The interest cost of all borrowings will not exceed 8% of total operating revenue

Performance target met. The interest cost of borrowing equals 0.40% of total operating revenue. ▲ The interest cost of all borrowings will not exceed 20% of total rates revenue

Performance target met. The interest cost of borrowing equals 0.90% of total rates revenue. ▲ Net operating cash flows excluding interest costs shall exceed interest cost by 2.5 times

Performance target not met. Interest was $123,847 for the year. This target was not met as the Council budgeted for and achieved a negative net operating cash flow.

▲ Comply with procedures in Liability Management Policy Performance target met.

Page 37

Actual Funding of Activities 2015/2016

The following table describes the actual cost of activities and their funding sources for the year ending 30 June 2016.

Issue 1 Issue 2 Issue 3 Issue 4(a) Issue 4(b) Issue 5 Activity Separate

Rates

SPES

Rate

General

Rate on CV

Gen Rate

Dairy Diff

UAGC Investments

& Reserves *

Levies &

Contributions

Rental

Income

Other

Income

Interest on

Reserves

Reserves/S

urpluses

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000

1,858 - - - - - Environmental Monitoring 1,858 - - (607) (254) (215) (706) - - (76) - - (1,858)

476 - - - - - Environmental Education 476 - - - - (270) (177) - - (29) - - (476)

- 248 - - - Emergency Management Southland 248 - - - - - - (242) - - - (6) (248)

2,264 172 - - - - Resource Management Policy & Planning 2,436 - - (482) (136) (265) (579) (59) - (245) - (670) (2,436)

175 88 88 87 - - Council Policy & Planning Analysis 438 - - - - (158) (103) (136) - (1) - (40) (438)

- 987 - - - Hazard Mitigation 987 - - (136) (43) (119) (195) - - (1,696) - 1,202 (987)

15 8 8 8 - - Oil Spills 39 - - - - - - - - (39) - - (39)

- 103 - - 387 - Catchment Planning 490 - - (125) (16) (12) (101) - - (103) - (133) (490)

- - - 4,093 - River Management 4,093 (2,464) - (473) (129) - (395) - - (975) (103) 446 (4,093)

- - - 1,049 - Land Drainage Co-ordination 1,049 (958) - (43) (13) - (36) (5) - (127) (101) 234 (1,049)

1,721 - - - - - Land Sustainability 1,721 (1,478) - - (91) - (59) (4) - (20) - (69) (1,721)

370 - - - - - Pollution Prevention 370 - - (183) (40) - (147) - - - - - (370)

- - - 3,394 - - Biosecurity (incl SPES) 3,394 (1,963) (223) - - - - (500) (15) (25) - (668) (3,394)

- 1,869 - - - - Consent Processing 1,869 - - (315) - - (207) - - (1,412) - 65 (1,869)

2,101 - - - - - Consent Compliance 2,101 - - (166) (90) (64) (210) (14) - (1,557) - - (2,101)

- - - - 2,766 Community Representation 2,766 - - - - (1,550) (1,018) (109) - (4) - (85) (2,766)

4,843 - - - - - Science 4,843 (1,025) (198) (306) (1,004) (41) - (437) - (1,832) (4,843)

- - 865 - - Property Management 865 - - - - - - - (802) (144) (165) 246 (865)

13,823 2,240 1,331 4,354 5,529 2,766 30,043 (6,863) (223) (3,555) (1,010) (2,959) (4,938) (1,110) (817) (6,890) (369) (1,310) (30,043)

* Investments & Reserves Comprise:

Dividend from South Port 4,273

Investment Income 1,867

Penalty Income 164

Less Interest allocated to Rating/Lease Districts (369)

Less interest allocated to reserves (260)

General Funds Surplus (737)

4,938

Note: This is an internal management report (including adjustments) and is included for information purposes only.

Expenditure Total

Expenditure

Funding Sources Total

Funding

Page 38

Budgeted Funding of Activities 2015/2016

The following table describes the budgeted cost of activities and their funding sources for the year ending 30 June 2016

Issue 1 Issue 2 Issue 3 Issue 4(a) Issue 4(b) Issue 5 Activity Separate

Rates

SPES

Rate

General

Rate on CV

Gen Rate

Dairy Diff

UAGC Investments

& Reserves *

Levies &

Contributions

Rental

Income

Other

Income

Interest on

Reserves

Reserves/S

urpluses

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000

1,770 - - - - - Environmental Monitoring 1,770 - - (623) (254) (194) (624) - - (75) - - (1,770)

496 - - - - - Environmental Education 496 - - - - (288) (185) - - (23) - - (496)

2,071 299 - - - - Regional Planning 2,370 - - (467) (136) (250) (534) - - (274) - (709) (2,370)

135 67 67 67 - - Council Policy & Planning 337 - - - - (92) (59) - - (146) - (40) (337)

- - 1,194 - - - Hazard Mitigation 1,194 - - (172) (43) (143) (230) - - (1,900) - 1,294 (1,194)

31 16 16 16 - - Oil Spills 78 - - - - - - - - (78) - - (78)

- - 644 - - - Emergency Mgmt Southland 644 - - - - - - (600) - - - (45) (644)

- 291 - - 146 - Catchment Planning 437 - - (65) (16) (7) (57) - - (291) - - (437)

- - - - 3,975 - River Works 3,975 (2,465) - (519) (129) - (416) - - (421) (144) 118 (3,975)

- - - - 1,292 - Land Drainage 1,292 (966) - (51) (13) - (41) - - (78) (81) (64) (1,292)

1,888 - - - - - Land Sustainability 1,888 (1,478) - - (150) - - - - - - (260) (1,888)

416 - - - - - Pollution Prevention 416 - - (163) (40) (51) (163) - - - - - (416)

- - - 3,036 - - Biosecurity (incl SPES) 3,036 (1,963) (223) - - - - (25) (15) (21) - (789) (3,036)

- 1,782 - - - - Consent Admin 1,782 - - - - (264) (169) - - (1,418) - 70 (1,782)

2,342 - - - - - Environmental Compliance 2,342 - - (363) (90) (113) (363) - - (1,412) - - (2,342)

- - - - - 2,592 Community Representation 2,592 - - - - (1,578) (1,012) (11) - - - 10 (2,592)

4,885 Science 4,885 - - (800) (198) (250) (801) - - (1,003) - (1,833) (4,885)

- - - 723 - - Property Management 723 - - - - - - - (799) - (148) 224 (723)

14,034 2,455 1,921 3,842 5,413 2,592 30,256 (6,872) (223) (3,224) (1,069) (3,231) (4,653) (636) (814) (7,140) (373) (2,023) (30,256)

* Investments & Reserves Comprise:

Dividend from South Port 3,488

Investment Income 1,676

Penalty Income 130

Less Interest allocated to Rating/Lease Districts (373)

Less interest allocated to reserves (268)

4,653

Expenditure Total

Expenditure

Funding Sources Total

Funding

Page 39 Page 39 Page 39Page 39

SECTION 4: FINANCES | PŪTEA

Financial Statements A guide to the financial pages which follow

▲ Statement of Comprehensive Revenue and Expense page 40

▲ Statement of Changes in Net Assets/Equity page 40

▲ Statement of Financial Position page 41

▲ Statement of Cash Flows page 42

▲ Notes to the Financial Statements

1. Summary of accounting policies pages 43-52 2. Operating revenue and expenses pages 53-54 3. Income taxes pages 55-57 4. Key management personnel compensation page 57 5. Remuneration of auditors page 57 6. Trade and other receivables page 58 7. Inventories page 59 8. Other financial assets and liabilities page 59 9. Other current assets page 60 10. Property, plant and equipment pages 61-64 11. Investment in Related Party page 65 12. Trade and other payables page 65 13. Employee entitlements page 65 14. Borrowings page 66 15. Equity pages 67-71 16. Commitments for expenditure page 72 17. Contingent liabilities and contingent assets page 73 18. Subsidiaries page 73 19. Related party disclosures page 74 20. Joint Venture – Emergency Management Southland page 75 21. Subsequent events page 75 22. Notes to the cash flow statement page 76 23. Severance payments (Council only) page 77 24. Remuneration (Council only) pages 77-78 25. Financial Instruments pages 79-84 26. Explanation of major variances against Annual Plan pages 85-86


Note 2016 Annual Plan 2015 2016 2015

$000 $000 $000 $000 $000

Revenue

Rates revenue 2 (a) 14,610 14,619 13,725 14,610 13,725

Government Grants 1,108 636 845 1,108 845

Other Revenue 2 (b) 12,091 11,631 12,812 44,545 43,375

Other gains/ (losses) 2 (c) 1,853 1,616 3,896 2,029 3,906

Total Revenue 2 (g) 29,662 28,502 31,278 62,292 61,851

Expenditure

Employee benefits expense 2 (d) (14,182) (13,653) (12,904) (23,652) (21,810)

Depreciation expense 10 (704) (794) (710) (3,723) (3,399)

Finance costs 2 (e) (124) (60) (75) (834) (1,000)

Other expenses 2 (f) (15,034) (15,749) (15,461) (26,582) (26,744)

Total Operating Expenditure (30,044) (30,256) (29,150) (54,791) (52,953)

Surplus/(Deficit) before income tax (382) (1,755) 2,128 7,501 8,898

-

Income tax expense 3 - - - (3,447) (3,044)

Surplus/(Deficit) for the period (382) (1,755) 2,128 4,054 5,854

Items that may be reclassified to Surplus / (Deficit)

Derivatives - - - - 203

(382) (1,755) 2,128 4,054 6,057

(382) (1,755) 2,128 1,135 3,395

15 (e) - - - 2,919 2,661

* (382) (1,755) 2,128 4,054 6,057

CouncilNote 2016 Annual Plan 2015 2016 2015

$000 $000 $000 $000 $000

Opening Equity 75,958 73,755 73,830 100,551 96,517

Total Comprehensive Revenue and

Expense attributable to:

Council (382) (1,755) 2,128 1,135 3,395

Minority interest 15(e) - - - 2,919 2,661

Dividend distribution - Minority interest 15(e) - - - (2,154) (2,023)

Closing Equity 75,576 72,001 75,958 102,451 100,551

* An explanation of major variances from the Annual Plan is contained in Note 26

The accompanying accounting policies and notes form part of these financial statements

Group

Group

Total Comprehensive Revenue and Expense

for the period

Statement of Changes in Net Assets / Equity

for the Year Ended 30 June 2016

Total Comprehensive Revenue and Expense

attributable to:

Council

Minority interest

Council

Statement of Comprehensive Revenue and Expense



Council

Note 2016 Annual Plan 2015 2016 2015

$000 $000 $000 $000 $000

Current Assets

Cash and Deposits 22(a) 877 124 10 1,785 2,163

Trade and other receivables 6 2,031 1,923 2,580 6,721 6,880

Inventories 7 121 200 135 121 135

Managed Funds 8 29,758 26,997 32,905 29,758 32,905

Prepayments 9 239 80 176 292 249

Total Current Assets 33,026 29,324 35,806 38,677 42,332

Non-Current Assets

Shares in subsidiary 18 8,721 8,721 8,721 - -

Other financial assets 8 109 640 - 109 -

Property, Plant and Equipment 10 37,783 36,169 37,696 85,151 78,323

Investment in Related Party 11 798 691 798 798 798

Total Non-Current Assets 47,411 46,221 47,215 86,058 79,121

TOTAL ASSETS 80,437 75,545 83,021 124,735 121,453

Current LiabilitiesBank Overdraft 22(a) (i) - - 2,400 - 2,400

Trade and other payables 12 3,288 2,390 3,319 7,091 6,273

Employee Entitlements 13 1,541 1,144 1,319 2,588 2,363

Borrowings 14 - - - 6,700 -

Current tax payable 3c - - - 1,087 1,052

Total Current Liabilities 4,829 3,534 7,038 17,466 12,088

Non-Current Liabilities

Other Financial Liabilities 8 - - - 370 232

Employee entitlements 13 32 10 25 69 65

Borrowings 14 - - - 4,000 8,200

Deferred tax liabilities 3d - - - 379 317

Total Non-Current Liabilities 32 10 25 4,818 8,814

TOTAL LIABILITIES 4,861 3,544 7,063 22,284 20,902

NET ASSETS 75,576 72,001 75,958 102,451 100,551

Equity

Equity 15 75,576 72,001 75,958 102,451 100,551

TOTAL EQUITY 75,576 72,001 75,958 102,451 100,551

Attributable to:

Council 75,576 72,001 75,958 90,926 89,791

Minority interest 15(e) - - - 11,525 10,760

TOTAL EQUITY 75,576 72,001 75,958 102,451 100,551

Statement of Financial Position

As at 30 June 2016

Group



Note 2016 Annual Plan 2015 2016 2015

$000 $000 $000 $000 $000

Cash flows from operating activities

Cash was provided by (applied to):

Receipts from customers 24,124 23,340 22,807 60,471 57,612

Interest received 14 60 36 23 51

Dividends received 4,273 3,488 4,012 - 1

Payments to suppliers and employees (29,126) (29,553) (28,155) (49,701) (47,356)

Finance costs (124) (60) (75) (691) (827)

Income tax paid - - (3,351) (2,877)

22( b ) (839) (2,725) (1,375) 6,751 6,604

Cash flows from investing activities


Proceeds from sale of other financial assets - - - - -

Reduction of Term Investment 5,000 2,931 - 5,000 -

Proceeds from sale of property, plant and equipment 22 149 28 228 35

Foreign Exchange gains / (losses) - - - - -

Acquisition of shares / investments (100) (640) - (100) -

Purchase of intangible assets - - - - -

Purchase of property, plant and equipment (816) (971) (1,931) (10,203) (8,620)

4,106 1,470 (1,903) (5,075) (8,585)

Cash flows from financing activities


Dividends paid to Non controlling interest - - - (2,154) (2,023)

Drawdown / (Repayment) of borrowings - - - 2,500 (2,101)

- - - 346 (4,124)

Net increase/(decrease) in Cash and cash equivalents 3,267 (1,255) (3,278) 2,022 (6,105)

Cash and cash equivalents at the beginning of the

financial year

(2,390) 1,379 888 (237) 5,868

Net foreign exchange differences - - - - -

22(a) 877 124 (2,390) 1,785 (237)


Statement of Cash Flows


Council

Cash and cash equivalents at the end of the

financial year

Net cash flow from operating activities

Net cash flow from investing activities

Net cash flow from financing activities

Group


Notes to the Financial Statements 1. Summary of Accounting Policies Reporting Entity Southland Regional Council is a Regional Council governed by the Local Government Act 2002. The entity being reported on is the Southland Regional Council. Environment Southland (“the Council”) is the brand name of the Southland Regional Council. The parent entity is the Council and the consolidated entity (“the Group”) includes South Port New Zealand Limited (“South Port”) and its group. The Council owns 66.48% of the issued shares of South Port New Zealand Limited. The primary objective of the Council and Group is to provide goods or services for the community or social benefit rather than making a financial return. The Council has designated itself and the Group as public benefit entities for financial reporting purposes. The financial statements of the Council and Group are for the year ended 30 June 2016. The financial statements were authorised for issue by Council on 5 October 2016. Statement of Compliance The financial statements have been prepared in accordance with the requirements of the Local Government Act 2002: Part 6, Section 98 and Part 3 of Schedule 10, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP). The financial statements comply with Public Benefit Entity (PBE) standards. The financial statements have been prepared in accordance with Tier 1 PBE standards. Basis of Preparation The financial statements have been prepared on the basis of historical cost except for the revaluation of certain financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The accounting policies set out below have been applied consistently to all periods presented in these financial statements. The financial statements are presented in thousands of New Zealand dollars. New Zealand dollars are the Council’s and Group’s functional currency. All values are rounded to the nearest thousand dollars ($000). As the numbers are presented in thousands small rounding differences may occur. These rounding differences are considered immaterial to the financial statements as a whole. Significant Accounting Policies Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits or service potential will flow to the group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable and represents receivables for goods and services provided in the normal course of business, net of discounts and GST. Revenue from Non-exchange Transactions Rates Revenue Rates are recognised as income when levied.


Grant Revenue and Subsidies Grants and subsidies are recognised upon entitlement as conditions pertaining to eligible expenditure have been fulfilled. Government grants are recognised as income when eligibility has been established with the grantor agency. The Council receives central government contributions:

For From Regional Civil Defence Ministry of Civil Defence Land Transport New Zealand Transport Agency Marine Oil Spills Maritime New Zealand

Revenue from Exchange Transactions Interest Revenue Interest revenue is recognised on a time proportionate basis using the effective interest method. Dividend Revenue Dividend revenue is recognised when the right to receive payments is established on a receivable basis. Rental Income Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Other Revenue – full cost recovery Rendering of Services Revenue from the rendering of services is recognised by reference to the stage of completion of the transaction at balance date, based on the actual service provided as a percentage of the total services to be provided. Revenue from port services is recognised in the accounting period in which the actual service is provided to the customer. Fees and charges are recognised as income when supplies and services have been rendered. Revenue relating to contracts and consent applications that are in progress at balance date is recognised by reference to the stage of completion at balance date. Fees received from the following activities are recognised as revenue from exchange transactions: ▲ resource consent processing; ▲ pest animal contract work; ▲ grazing leases and license; ▲ enforcement work; ▲ dividends, interest and rental income. Other Gains and Losses Net gains or losses on the sale of investment property, property plant and equipment, property intended for sale and financial assets are recognised when an unconditional contract is in place and it is probable that the Council and/or Group will receive the consideration due. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. (a) Council and/or Group as Lessor

Amounts due from lessees under finance leases are recorded as receivables at the amount of the net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the leases. Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.


(b) Council and/or Group as Lessee Assets held under finance leases are recognised at their fair value or, if lower, at amounts equal to the present value

of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the Statement of Financial Position as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a

constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised.

Rentals payable under operating leases are charged to income on a straight line basis over the term of the relevant lease

(c) Lease Incentives Benefits received and receivable as an incentive to enter into an operating lease are charged to income on a straight

line basis over the lease term. Taxation The tax expense represents the sum of the tax currently payable and deferred tax, except to the extent that it relates to items recognised directly in equity, in which case the tax expense is also recognised in equity. Tax currently payable is based on taxable profit for the period. Taxable profit differs from net surplus/(deficit) before tax as reported in the Statement of Comprehensive Revenue and Expense because it excludes items of income or expense that are taxable in other years and it further excludes items that are never taxable or deductible. The Council’s and Group’s liability for current tax is calculated using tax rates that have been enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Council and Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Current and deferred tax is recognised as an expense or income in the surplus/(deficit), except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity. Goods and Services Tax A Revenues, expenses, assets and liabilities are recognised net of the amount of goods and services tax (GST), except for receivables and payables which are recognised inclusive of GST. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Statement of Cash Flows For the purpose of the Statement of Cash Flows, cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. The following terms are used in the Statement of Cash Flows: ▲ operating activities are the principal revenue producing activities of the Group and other activities that are not

investing or financing activities;


▲ investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents; and

▲ financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.

Financial Instruments Financial assets and financial liabilities are recognised on the Council’s or Group’s Statement of Financial Position when the Council and/or Group becomes a party to contractual provisions of the instrument. Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs, except for those financial assets classified as fair value through profit or loss which are initially valued at fair value. Financial Assets Financial Assets are classified into the following specified categories: financial assets “at fair value through profit or loss”, “held-to-maturity” investments, “available-for-sale” financial assets, and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. (a) Effective Interest Method The effective interest method referred to below, is a method of calculating the amortised cost of a financial asset

and of allocating interest income over the relevant period. The effective interest rate is the interest rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

(b) Financial Assets at Fair Value through Surplus or Deficit Financial assets are classified as financial assets at fair value through surplus or deficit where the financial asset:

▲ has been acquired principally for the purpose of selling in the near future; ▲ is a part of an identified portfolio of financial instruments the Council and Group manages together and has

a recent actual pattern of short-term profit-taking; or ▲ is a derivative that is not designated and effective as a hedging instrument.

Financial assets at fair value through surplus or deficit are stated at fair value, with any resultant gain or loss recognised in the Statement of Comprehensive Revenue and Expense. The net gain or loss is recognised in the Statement of Comprehensive Revenue and Expense and incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described later in this note.

The Council and Group have classified their managed funds as financial assets at fair value through surplus or deficit. This fund includes cash, bonds and equities. Financial assets held for trading purposes are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in the surplus(deficit).

(c) Held-to-Maturity Investments Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed

maturities and there is the positive intention and ability to hold to maturity. They are included in current assets, except for maturities greater than 12 months after balance date, which are included in non-current assets.

After initial recognition they are measured at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit.

The Council and Group do not hold any financial assets in this category.

(d) Available-for-Sale Financial Assets

Certain equity investments held by Group are classified as being available-for-sale and are stated at fair value. Fair value is determined in the manner described later in this note. Gains and losses arising from changes in fair value are recognised directly in other comprehensive income, with the exception of interest calculated using the effective interest method and impairment losses which are recognised directly in surplus for the year. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the available-for-sale revaluation reserve is included in surplus for the year.


Dividends on available-for-sale equity instruments are recognised in surplus for the year when the Council’s and Group’s right to receive payments is established.

(e) Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance date, which are included in non-current assets.

After initial recognition, they are measured at amortised cost using the effective interest method less impairment.

Interest is recognised by applying the effective interest rate. Gains and losses when the asset is impaired or derecognised are recognised in the surplus or deficit.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. A provision for impairment is established when there is objective evidence that the Council or Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is expensed in surplus for the year.

(f) Impairment of Financial Assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the

exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in surplus for the year.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through surplus for the year to the extent the carrying amount of the investment at the date of impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial Liabilities

(a) Trade & Other Payables

Trade payables and other accounts payable are recognised when the Council and Group becomes obliged to make future payments resulting from the purchase of goods and services.

Trade and other payables are initially recognised at fair value and are subsequently measured at amortised cost, using the effective interest method.

(b) Borrowings

Borrowings are recorded initially at fair value, net of transaction costs. Borrowing costs attributable to qualifying assets are capitalised as part of the cost of those assets.

Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in the surplus/(deficit) over the period of the borrowing using the effective interest method.

Derivative Financial Instruments The Group enters into derivative financial instruments to manage its exposure to interest rate and foreign exchange risk using interest rate swaps and forward exchange contracts. The Council and Group do not hold derivative financial instruments for speculative purposes.


Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each balance date. Derivative instruments entered into by the Council and Group do not qualify for hedge accounting. The resulting gain or loss is recognised in surplus for the period immediately. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

(a) Fair Value Estimation

The fair value of financial instruments traded in active markets (such as held for trading assets and available-for-sale equities) is based on quoted market prices at the balance date. The quoted market price used for financial assets held by the Council and Group is the current bid price; the appropriate quoted market price for financial liabilities is the current offer price. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Council and Group use a variety of methods and makes assumptions that are based on market conditions existing as each balance date.

Quoted market prices or dealer quotes for similar instruments are used for long-term investment and debt instruments held. The fair value of interest rate swaps, or foreign exchange contracts, is the estimated amount that the Council and Group would receive or pay to terminate the swap/contract at the reporting date, taking into account current interest rates and/or exchange rates.

Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on a weighted average basis with an appropriate allowance for obsolescence and deterioration. Property held for sale Property classified as held for sale is measured at: ▲ carrying value for items transferred from property, plant and equipment. Property is classified as held for sale if the carrying amount will be recovered through a sales transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the property is available for immediate sale in its present state. There must also be an expectation of completing the sale within one year from the date of classification. Property, Plant and Equipment The Council and Group have the following classes of property, plant and equipment:

(a) Operational Assets Operational assets include:

▲ Council owned land, buildings, rental land, rental buildings, motor vehicles and other plant and equipment; and

▲ South Port New Zealand Limited land, buildings and improvements, wharves and berths dredging, and plant, equipment and vehicles.

(b) Infrastructural Assets

Infrastructural assets deliver benefits direct to the community and are associated with major flood protection and land drainage schemes. Infrastructural assets include flood banks, protection works, structures, drains, bridges and culverts

Cost Property, plant and equipment are recorded at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the assets. Where an asset is acquired for no cost, or for a nominal cost, it is recognised at fair value at the date of acquisition.


Depreciation Operational and infrastructural assets, with the exception of land, are depreciated on either a straight-line or diminishing value basis depending on the class of asset. Rates are calculated to allocate the cost depending on the class less estimated residual value over their estimated useful life. The nature of infrastructural stop banks and earthworks assets is considered equivalent to land improvements and as such they do not incur a loss of service potential over time. Accordingly, stop banks and earthworks assets are not depreciated. Other infrastructural assets are depreciated on a straight-line basis to write off the cost of the asset to its estimated residual values over its estimated useful life. Expenditure incurred to maintain these assets at full operating capability is charged to the surplus/deficit in the year incurred. The following estimated useful lives are used in the calculation of depreciation:

Asset Life Operational Assets Land – Council Unlimited Buildings – Council 2%-10% DV Rental land - Council Unlimited Rental buildings - Council 2% - 10% DV Other plant and equipment – Council 2.5% - 10% DV/SL Motor vehicles - Council 15% SL Land – South Port Unlimited Buildings – South Port 2% - 7 % SL Plant and machinery – South Port 2% - 33% SL

Infrastructural Assets Stop banks and earthworks Unlimited Bridges 1% SL Large culverts 1% - 2.5% SL Tidegate structures 1% - 2.5% SL

The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. Disposal An item of property, plant and equipment is derecognised upon disposal or recognised as impaired when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the surplus for the period the asset is derecognised. Impairment of Property, Plant and Equipment

At each reporting date, the Council and Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Council and Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential. In assessing value in use for cash-generating assets, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in surplus for the year immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.


Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in surplus for the year immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase. Employee Entitlements Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Council and Group in respect of services provided by employees up to reporting date. Superannuation Schemes Defined Contribution Schemes Obligations for contributions to Kiwisaver Schemes are accounted for as defined contribution superannuation schemes and are recognised as an expense in the surplus or deficit when incurred.

Provisions Provisions are recognised when the Council and Group have a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably. Basis of Consolidation

The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the Group, being the Council entity and its controlled entities as defined in PBE IPSAS 6 Consolidated and Separate Financial Statements. A list of controlled entities appears in the financial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If, after reassessment, the fair value of the identifiable net assets acquired exceeds the cost of acquisition, the excess is credited to profit and loss in the period of acquisition. The interest of non-controlling shareholders is stated at the non-controlling interests’ proportion of the fair values of the assets and liabilities recognised. The consolidated financial statements include the information and results of each subsidiary from the date on which the Council obtains control and until such time as the Council ceases to control the subsidiary. In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the Group are eliminated in full. The Council’s investment in South Port New Zealand Limited is carried at cost less any impairment losses in the Council’s own parent entity financial statements.


Joint Ventures The Council is a member of the joint venture known as Emergency Management Southland, which delivers the civil defence and emergency management responsibilities of the four councils in the Southland region, namely Environment Southland, Invercargill City Council, Gore District Council, and Southland District Council. Governance of the operation is provided by the Southland Civil Defence and Emergency Management Group, a joint standing committee of the four councils. In accordance with IPSAS 8 Interests in Joint Ventures, the consolidated financial statements include the Council’s share of the joint venture entity’s assets, liabilities revenue and expenses. Refer to note 20 for further disclosure. Equity Equity is the community’s interest in the Council and Group and is measured as the difference between total assets and total liabilities. Equity consists of a number of reserves to enable clearer identification of the specified uses that the Council makes of its accumulated surpluses. Reserves are a component of equity generally representing a particular use to which various parts of equity have been assigned. Reserves may be legally restricted or created by Council. The components of equity are: capital lease area balances, special reserves, rating district balances, and retained earnings.

Restricted and Council Created Reserves

Restricted reserves are a component of equity generally representing a particular use to which various parts of equity have been assigned. Reserves may be legally restricted or created by the Council. Restricted reserves are those subject to specific conditions accepted as binding by the Council and which may not be revised by the Council without reference to the Courts or a third party. Transfers from these reserves may be made only for certain specified purposes or when certain specified conditions are met. Also included in restricted reserves are reserves restricted by Council decision. The Council may alter them without references to any third party or the Courts. Transfers to and from these reserves are at the discretion of the Council. Foreign Currency Foreign Currency Transactions All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Exchange differences are recognised in surplus for the year in which they arise. Budget Amounts The budget amounts are those approved by the Council at the beginning of the year in the Long Term Plan/Annual Plan. The budget amounts have been prepared using accounting policies that are consistent with those adopted by the Council for the preparation of the financial statements. The budget figures are for Council only and do not include budget information relating to subsidiaries. Allocation of Overheads The cost of service for each significant activity of the Council has been derived using the cost allocation system outlined below. Direct costs are those costs directly attributable to a significant activity. Indirect costs are those costs that cannot be identified in an economically feasible manner with a specific significant activity.


Where possible costs are charged or allocated directly to the beneficiary of the service. The remaining indirect costs have been allocated on the following basis:

Corporate Management - per staff member Information Technology - per computer Council Servicing/Secretarial - allocated according to estimated use of services Administration - per staff member Finance - per staff member

Critical Accounting Estimates and Assumptions

In preparing these financial statements the Council and Group have made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances. There were no estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Critical Judgements Management has exercised the following critical judgements in applying the Council’s and Group’s accounting policies for the period ended 30 June 2016: Classification of Property (a) Council and Group The Council owns a number of properties that are held for service delivery objectives as part of the Council’s

various flood protection schemes. The receipt of market based rental from these properties is incidental to holding these properties. These properties are accounted for as property, plant and equipment.

Estimate of fair value of shares in subsidiary Council’s investment of $8,720,786 in its subsidiary, South Port New Zealand Limited (South Port) is at cost. At 30 June 2016, the fair value of this investment based on the NZX quoted bid price was $80,231,236 (2015: $79,882,404).


2 Operating Revenue and Expenses

2016 2015 2016 2015

$000 $000 $000 $000

Revenue

Revenue includes the following items:

(a) Rates Revenue:

General rates 7,523 7,076 7,523 7,076

Separate rates 6,864 6,437 6,864 6,437

Southern Pest Eradication Society rates 223 212 223 212

14,610 13,725 14,610 13,725

(b) Other Revenue:

Revenue from rendering of services:

Port revenue - - 36,718 34,559

Local contributions 832 915 832 915

Consent recoveries 1,418 1,805 1,418 1,805

Compliance Monitoring and Recoveries 1,076 1,282 1,076 1,282

Prosecutions, Fines and Infringements 481 242 481 242

Marine Fee revenue 1,696 1,587 1,696 1,587

Operating lease rental revenue 818 787 818 787

Interest on bank deposits 14 36 23 51

Dividend from Subsidiary 4,273 4,012 - -

Other operating revenue 1,483 2,146 1,483 2,146

12,091 12,812 44,545 43,375

(c) Other Gains / (Losses)

Gain on disposal of property, plant and

equipment

- - 176 10

Net change in fair value of other financial assets

and liabilities carried at fair value through profit or

loss - Realised

1,182 1,510 1,182 1,510

Net change in fair value of other financial assets

and liabilities carried at fair value through profit or

loss - Unrealised

671 2,386 671 2,386

1,853 3,896 2,029 3,906

(d) Employee Benefits Expense

Salaries and wages 12,674 11,530 21,673 20,015

Defined contribution plans 585 568 883 825

Other employee benefits 923 806 1,096 970

14,182 12,904 23,652 21,810

Council Group


2016 2015 2016 2015

$000 $000 $000 $000

(e) Finance Costs

Interest on loans carried at amortised cost - - 572 748

Change in fair value of interest rate swaps - - 138 177

Other interest expense 124 75 124 75

124 75 834 1,000

Council Group

(f) Other Expenses

Net bad and doubtful debts (recovered) (31) 64 (28) 64

Loss on disposal of property, plant and equipment (15) 24 9 24

Donations - - 4 7

Grants and contributions 1,537 1,540 1,537 1,540

Operating lease rental - minimum lease payments 255 346 694 776

Directors remuneration - - 236 236

Other operating expenses 13,288 13,487 24,130 24,097

15,034 15,461 26,582 26,744

Note: Audit fees are disclosed under Note 5.

(g) Disclosure of Exchange and Non-exchange transactions

Revenue from Non-exchange transactions 2016 2015 2016 2015

Note $000 $000 $000 $000

General Rates 7,523 7,076 7,523 7,076

Separate Rates 6,864 6,437 6,864 6,437

Southern Pest Eradication Society Rate 223 212 223 212

Levies and Contributions 1,108 845 1,108 845

Rates Penalties 95 107 95 107

Prosecutions and Infringements 481 242 481 242

Insurance Recoveries - 17 - 17

Donations Received 4 7 4 7

Revenue from Exchange transactions

Local Contributions 832 915 832 915

Rental Income 818 787 818 787

External Recoveries 5,574 6,689 42,468 41,259

Investment Income 1,196 3,932 1,205 3,947

Dividend from South Port 4,273 4,012 - -

28,991 31,278 61,621 61,851

Current Assets

Receivables from Non-exchange transactions (Rates) 864 721 864 721

Receivables from Exchange transactions 1,167 1,859 5,857 6,159

Total Receivables 6 2,031 2,580 6,721 6,880

In accordance with PBE IPSAS 9: Exchange transactions and PBE IPSAS 23: Non-exchange transactions, income and current

assets are disclosed below according to whether they are Exchange or Non-exchange transactions.

Council Group


3 Income Taxes

2016 2015 2016 2015

$000 $000 $000 $000

(a) Income Tax Recognised in Profit or Loss

Tax expense / (income) comprises:

Current tax expense / (credit)

Current year - - 3,392 3,007

Adjustments for prior years - - (6) (5)

- - 3,386 3,002

Deferred tax expense / (credit)

Origination and reversal of temporary differences - - 61 42

Adjustments for prior years - - - - - - 61 42

Tax expense / (income) - - 3,447 3,044

Surplus / (deficit) before income tax (1,053) 2,128 6,830 8,898

Income tax expense calculated at 28% (295) 596 1,912 2,491

Temporary differences - - 4 (28)

Non deductible expenses 8,412 8,162 8,496 8,222

Non assessable income (6,921) (7,635) (6,960) (7,637)

1,196 1,123 3,453 3,049

Taxation effect of imputation credits - - - -

Imputation credits utilised (28% of net dividend) (1,196) (1,123) - -

Adjustments for prior years - - (6) (5)

Temporary differences - - - -

- - 3,447 3,044

(b) Income Tax Recognised in Other Comprehensive Income

There was no current or deferred tax charged/(credited) directly to equity during the period.

2016 2015 2016 2015

$000 $000 $000 $000

(c ) Current Tax Assets and Liabilities

Current Tax Payable:

Current Tax Payable - - 1,087 1,052

The prima facie income tax expense on pre-tax accounting surplus reconciles to the income tax expense in the

financial statements as follows:

The tax rate used in the above reconciliation is the corporate tax rate of 28% payable on taxable profits under

New Zealand tax law. There has been no change in the corporate tax rate when compared with the previous

reporting period.

Council Group

Council Group


(d) Deferred Tax Balances Comprise:

Taxable and deductible temporary differences arising from the following:

Opening Charged to Charged to Closing

balance income other balance

comprehensive

income

2016 $000 $000 $000 $000

Gross deferred tax liabilities:

Other financial assets and receivables - - - -

Property, plant and equipment (545) (93) - (638)

(545) (93) - (638)

Gross deferred tax assets:

Other financial assets - - - -

Provisions 228 31 - 259

228 31 - 259

(317) (61) - (379)

Opening Charged to Charged to Closing

balance income other balance

comprehensive

income

2015 $000 $000 $000 $000

Gross deferred tax liabilities:

Other financial assets and receivables - - - -

Property, plant and equipment (461) (84) - (545)

(461) (84) - (545)

Gross deferred tax assets:

Other financial assets - - - -

Provisions 185 43 - 228

185 43 - 228

(276) (42) - (317)

At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings

of subsidiaries for which deferred tax liabilities have not been recognised is $Nil (2015: $Nil).

Group

Group


2016 2015 2016 2015

$000 $000 $000 $000

(e) Imputation Credit Account Balances

Balance at 30 June 2016 - - 8,434 7,547

- - 8,434 7,547

Imputation credits available directly and indirectly to Council through:

Council - -

Subsidiaries 8,434 7,547

8,434 7,547

Council Group

4 Key Management Personnel Compensation

2016 2015 2016 2015

$000 $000 $000 $000

Short-term employee benefits 1,504 1,350 2,868 2,673

Other long-term employee benefits - - 64 63

1,504 1,350 2,932 2,736

GroupCouncil

The compensation of the Councillors, Chief Executive, and four divisional Directors, being the key

management personnel of the entity, is set out below:

5 Remuneration of Auditors

2016 2015 2016 2015

$000 $000 $000 $000

Audit fees for financial statement audit 98 93 98 93

Audit fees for the 2015-2025 Long Term Plan - 133 - 133

Fees for other services 16 20 16 20

114 246 114 246

Audit fees to other auditors for audit of

financial statements of group entities

- - 47 76

- - 47 76

114 246 161 322

The auditor of Environment Southland, for and on behalf of the Office of the Auditor-General is Deloitte.

The auditor of South Port New Zealand Ltd is Crowe Horwath.

GroupCouncil


6 Trade and Other Receivables

2016 2015 2016 2015

$000 $000 $000 $000

Trade Receivables 1,631 1,933 6,371 6,258

Allowance for doubtful debts (136) (101) (186) (126)

1,495 1,832 6,185 6,132

Goods and services tax (GST) receivable 254 298 254 298

Other sundry receivables 282 450 282 450

2,031 2,580 6,721 6,880

Current 2,031 2,580 6,721 6,880

Non-current - - - -

2,031 2,580 6,721 6,880

Council Group

In determining the recoverability of a trade receivable the Group considers any change in the credit quality

of the trade receivable from the date credit was initially granted up to the reporting date. The Group is

exposed to credit risk arising from a small number of shipping line and warehouse clients. Regular

monitoring of trade receivables is undertaken to ensure that the credit exposure remains within the Group's

normal trading terms of trade.

For Council, the concentration of credit risk is limited due to the customer base being large and unrelated.

The Council and Group believes no further credit provision is required in excess of the allowance for

doubtful debts.

Trade receivables are non-interest bearing and generally on monthly terms.

The Council does not provide for impairment on rates receivables less than six years past due, as it has

various powers under Local Government (Rating) Act 2002 to recover any outstanding debts. Ratepayers

can apply for payment plan options in special circumstances. Where such payment plans are in place, debts

are discounted to the present value of future repayments.

Included within the Group's trade and other receivable balance are debtors with a carrying amount of

$2,462,607 (2015: $1,393,685), Council $1,042,607 (Council 2015: $1,014,685), which are past due at the

reporting date for which the Group has not provided. The Group has not provided for these as $863,830

(2015 $720,000) relates to rates arrears (recoverable via the means outlined above) and there has not been a

significant change in credit quality, so the Group believes that the amounts are still considered recoverable.

The Group holds no collateral as security or other credit enhancements over receivables that are either past

due or impaired. The average collection period of these receivables is Council: 30 days (2015: 29 days) and

Group: 41 days (2015: 42 days).

An allowance has been made for estimated irrecoverable amounts and has been calculated based on

expected losses. Expected losses have been determined based on reference to past default experience and

review of specific debtors.


7 Inventories

2016 2015 2016 2015

$000 $000 $000 $000

Raw materials (at cost) 121 135 121 135

121 135 121 135

Council Group

8 Other Financial Assets and Liabilities

2016 2015 2016 2015

$000 $000 $000 $000

Fair value through Profit or Loss:

Classified as held for trading

Managed Funds

ANZ Investments - NZ Government and Local

Authority Stock

(i) 13,583 15,448 13,583 15,448

ANZ Investments - Other Bonds (i) 5,611 6,940 5,611 6,940

ANZ Investments - NZ Cash (ii) 9 13 9 13

Forsyth Barr - Cash Management Funds (ii) 2,146 1,007 2,146 1,007

Forsyth Barr - Equities (i) 8,409 9,497 8,409 9,497

29,758 32,905 29,758 32,905

Interest rate derivatives (iii) - - (370) (232)

Shares - Civic Assurance Limited (iv) 9 - 9 -

Loan to Invercargill City Council (v) 100 - 100 -

29,867 32,905 29,497 32,673

Disclosed in the financial statements as:

Current Assets 29,758 32,905 29,758 32,905

Non-current Assets 109 - 109 -

Non-current Liabilities - - (370) (232)

29,867 32,905 29,497 32,673

There are no impairment provisions for other financial assets.

(i)

(ii) The Group held no fixed interest deposits via its managed fund portfolio at 30 June 2016 (2015: $Nil).

(iii)

(iv) The Group was issued 10,000 share in Civic Assurance Limited on 24 March 2016.

(v)

Council Group

Classified as held for trading. The Group holds a portfolio of floating and fixed interest deposits, bonds and equity

securities that is managed externally by ANZ Investments and Forsyth Barr. This classification has been determined as all

assets within this category are held for trading at any point should the Fund managers determine it is in the Council's best

investment interests to do so.

The Group has entered into a fixed for floating interest rate swap to hedge its floating debt. The Group has not adopted

hedge accounting.

Interest Rate Swap - South Port NZ Ltd has an interest rate swap in place which matures in November 2019. The interest

rate swap has a fixed swap rate of 4.45% with a notional contract amount of $5 million at 30 June 2016 (2015: $5 Million).

Interest Rate Cap - South Port NZ Ltd has an interest rate cap in place which matures in March 2017. The interest rate cap

has a fixed cap rate of 5% with a notional contract amount of $3 million at 30 June 2016 (2015: $3 Million).

The Group advanced $100,000 to Invercargill City Council during the year to support the low interest loans offered on the

Clean Air scheme. This is interest free and repayable in ten years time.


9 Other Current Assets

2016 2015 2016 2015

$000 $000 $000 $000

Prepayments 239 176 292 249

239 176 292 249

Council Group

Page 61

10 Property, Plant and Equipment

COUNCIL ONLY

Cost

1 July 2015

Additions Disposals Transfers Cost

30 June 2016

Accumulated

depreciation

and

impairment

charges

1 July 2015

Impairment losses

charged in

Statement of

Comprehensive

Income

Depreciation

expense *

Accumulated

depreciation

reversed on

disposal

Accumulated

depreciation

and

impairment

charges

30 June 2016

Carrying

amount

30 June 2016

$'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s

Council Operational Assets

Land 145 - - 145 - - - 145

Buildings 4,426 189 - 4,615 (1,267) (114) (1,381) 3,234

Rental Land 4,591 - - 4,591 - - - 4,591

Rental Buildings 1,067 - - 1,067 (676) (22) - (698) 369

Motor Vehicles 2,171 309 (92) 2,388 (1,303) (248) 89 (1,462) 926

Other Plant and Equipment 3,941 330 (77) 4,194 (2,568) (306) 74 (2,800) 1,394

Total Operational Assets 16,341 828 (169) - 17,000 (5,815) - (690) 163 (6,342) 10,658

Council Infrastructural Assets

Stopbanks and Earthworks 24,668 24,668 - - - 24,668

Bridges 106 106 (11) (2) (13) 93

Large Culverts 2,157 2,157 (360) (33) (393) 1,764

Tidegate Structures 719 719 (109) (10) (119) 600

Total Infrastructural Assets 27,650 - - - 27,650 (479) - (45) - (524) 27,126

Total Council Property, Plant and Equipment 43,991 828 (169) - 44,650 (6,294) - (735) 163 (6,866) 37,783

* Depreciation differs from the Statement of Comprehensive Income and Expense by $31k which is the Joint Venture share of Emergency Management Southland total depreciation.

2016

Page 62

COUNCIL ONLY

Cost

1 July 2014


30 June 2015

Accumulated

depreciation

and

impairment

charges

1 July 2014

Impairment losses

charged in

Statement of

Comprehensive

Income

Depreciation

expense

Accumulated

depreciation

reversed on

disposal

Accumulated

depreciation

and

impairment

charges

30 June 2015

Carrying

amount

30 June 2015

$'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s

Council Operational Assets

Land 145 - - - 145 - - - - - 145

Buildings 3,089 1,337 - - 4,426 (1,178) - (89) - (1,267) 3,159

Buildings - Work in Progress 163 - - (163) - - - - - - -

Rental Land 4,591 - - - 4,591 - - - - - 4,590

Rental Buildings 1,116 - (49) - 1,067 (703) - (22) 49 (676) 391

Motor Vehicles 2,115 116 (59) - 2,171 (1,089) - (267) 54 (1,303) 867

Other Plant and Equipment 3,447 642 (148) - 3,941 (2,425) - (287) 145 (2,568) 1,373

Total Operational Assets 14,667 2,094 (256) (163) 16,341 (5,395) - (666) 248 (5,815) 10,525


Stopbanks and Earthworks 24,707 - (39) - 24,668 - - - - - 24,668

Bridges 106 - - - 106 (9) - (2) - (11) 95

Large Culverts 2,157 - - - 2,157 (327) - (33) - (360) 1,797

Tidegate Structures 719 - - - 719 (99) - (10) - (109) 610

Total Infrastructural Assets 27,689 - (39) - 27,650 (435) - (44) - (479) 27,171

Total Council Property, Plant and Equipment 42,356 2,094 (295) (163) 43,990 (5,830) - (710) 248 (6,294) 37,696

2015

Council infrastructural assets represent Flood Protection and Control Works as defined in the Local Government (Financial Reporting and Prudence) Regulations 2014. All infrastructural assets acquired during the year were constructed by

Council. There were no infrastructural assets transferred to the Council from External entities.

Page 63

GROUP

Cost

1 July 2015


30 June 2016

Accumulated

depreciation

and

impairment

charges

1 July 2015

Impairment losses

charged in

Statement of

Comprehensive

Income

Depreciation

expense *

Accumulated

depreciation

reversed on

disposal

Accumulated

depreciation

and

impairment

charges

30 June 2016

Carrying

amount

30 June 2016

$'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s

Group Operational Assets

Land - Council 145 - - - 145 - - - - - 145

Buildings - Council 4,426 189 - - 4,615 (1,267) - (114) - (1,381) 3,234

Rental Land - Council 4,591 - - - 4,591 - - - - - 4,591

Rental Buildings - Council 1,067 - - - 1,067 (676) - (22) - (698) 369

Motor Vehicles - Council 2,172 309 (92) - 2,388 (1,304) - (248) 89 (1,464) 924

Other Plant and equipment - Council 3,940 330 (77) - 4,192 (2,565) - (306) 74 (2,797) 1,395

Land - Subsidiary 2,713 219 2,932 - - 2,931

Buildings - Subsidiary 16,218 4,578 20,796 (5,348) (342) (5,689) 15,105

Plant and Machinery - Subsidiary 60,020 5,053 (1,393) 63,680 (32,976) (2,677) 1,303 (34,350) 29,329

Total Operational Assets 95,292 10,678 (1,562) - 104,406 (44,136) - (3,709) 1,466 (46,379) 58,023


Stopbanks and Earthworks 24,668 - - - 24,668 - - - - - 24,668

Bridges 106 - - - 106 (11) - (2) - (13) 93

Large Culverts 2,157 - - - 2,157 (357) - (33) - (390) 1,767


Total Infrastructural Assets 27,650 - - - 27,650 (477) - (45) - (522) 27,128

Total Group Property, Plant and Equipment 122,942 10,678 (1,562) - 132,056 (44,613) - (3,754) 1,466 (46,901) 85,151

* Depreciation differs from the Statement of Comprehensive Income and Expense by $31k which is the Joint Venture share of Emergency Management Southland total depreciation.

2016

Page 64

GROUP

Cost

1 July 2014


30 June 2015

Accumulated

depreciation

and

impairment

charges

1 July 2014

Impairment losses

charged in

Statement of

Comprehensive

Income

Depreciation

expense

Accumulated

depreciation

reversed on

disposal

Accumulated

depreciation

and

impairment

charges

30 June 2015

Carrying

amount

30 June 2015

$'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s $'000s

Group Operational Assets

Land - Council 145 - - - 145 - - - - - 145

Buildings - Council 3,089 1,337 - - 4,426 (1,177) - (89) - (1,267) 3,159

Buildings - Work in Progress 163 - - (163) - - - - - - -

Rental Land - Council 4,591 - - - 4,591 - - - - - 4,591

Rental Buildings - Council 1,116 - (49) - 1,067 (703) - (22) 49 (676) 391

Motor Vehicles - Council 2,115 116 (58) - 2,172 (1,090) - (267) 54 (1,304) 867

Other Plant and equipment - Council 3,447 642 (148) - 3,940 (2,423) - (287) 145 (2,565) 1,374

Land - Subsidiary 2,713 - - - 2,713 - - - - - 2,713

Buildings - Subsidiary 15,617 613 (12) - 16,218 (5,048) - (308) 7 (5,348) 10,869

Plant and Machinery - Subsidiary 52,574 7,982 (536) - 60,020 (31,116) - (2,381) 521 (32,976) 27,045

Total Operational Assets 85,570 10,690 (803) (163) 95,292 (41,557) - (3,354) 776 (44,136) 51,154


Stopbanks and Earthworks 24,707 - (39) - 24,668 - - - - - 24,668

Bridges 106 - - - 106 (9) - (2) - (11) 95

Large Culverts 2,157 - - - 2,157 (325) - (33) - (357) 1,799


Total Infrastructural Assets 27,689 - (39) - 27,650 (433) - (45) - (477) 27,171

Total Group Property, Plant and Equipment 113,259 10,690 (842) (163) 122,942 (41,990) - (3,399) 776 (44,613) 78,323

2015


11 Investment in Related Party

The Council has established a Council Controlled Organisation ("CCO") with five other regional councils for

the purposes of collaboratively developing and maintaining a software application suite for use by regional

councils in the delivery of their activities under a long-term plan.

The CCO has taken the form of a limited liability company called Regional Software Holdings Limited

(RSHL), incorporated on 17 October 2012 with the shareholders being the six regional councils. The council's

shareholding as at 30 June 2016 was 15.5%. (2015:15.5%)

12 Trade and Other Payables

2016 2015 2016 2015

$000 $000 $000 $000

Trade payables 2,870 2,589 6,673 5,543

Other accrued charges 418 730 418 730

3,288 3,319 7,091 6,273

(i) The average credit period on purchases is 30 days

(ii)

Council Group

Council has not made provision in the 2016 year for any Risk Pool calls regarding leaky homes (2015:

$Nil). No calls have become payable in July 2016 but it is possible that a further call will become payable in

the 2016/17 year.

13 Employee Entitlements

2016 2015 2016 2015

$000 $000 $000 $000

Accrued salary and wages 540 454 1,028 861

Annual leave 1,024 881 1,566 1,495

Long service leave 9 9 63 68

Sick leave - - - 4

1,573 1,344 2,657 2,428

Disclosed in the financial statements as:

Current 1,541 1,319 2,588 2,363

Non-current 32 25 69 65

1,573 1,344 2,657 2,428

Council Group


14 Borrowings

2016 2015 2016 2015

$000 $000 $000 $000

Secured - at amortised cost

Current borrowings - - 6,700 -

Non-current borrowings - - 4,000 8,200

- - 10,700 8,200

Facility 1 - $8 million expiring 31 March 2017

Facility 2 - $4 million expiring 31 March 2017

Facility 1 - $5 million expiring 31 October 2019

Group

Interest on the first $5 million drawn at any one time is payable according to the 5 year interest rate swap

agreement (expiring 4 November 2019) the Company has with HSBC. Interest on the next $3 million drawn

at any one time is payable according to the 3 year interest rate cap agreement (expiring 3 March 2017) the

Company has with HSBC. Interest on the balance of funds drawn at any time is calculated using a variable rate

based on the Bank Bill Reference Rate (BKBM).

South Port New Zealand Limited's credit facility of $17 million from HSBC (2015: $17.5 million) is split

between three different lines of credit as follows:

The total facility is secured by way of a general security registered over all assets both present and future and

uncalled capital of South Port New Zealand Limited.

Council


15 Equity

2016 2015 2016 2015

$000 $000 $000 $000

Lease area balances (a) 3,837 3,632 3,837 3,632

Special reserves (b) 16,398 16,639 16,398 16,639

Rating district balances (c) 4,040 3,382 4,040 3,382

Retained earnings (d) 51,300 52,304 66,651 66,139

Non controlling interest (e) - - 11,525 10,760

75,576 75,958 102,451 100,551

(a) Lease Areas (Council and Group) - Restricted Reserves

Balance Plus Interest Transfers Balance

1/07/2015 Income Paid Out 30/06/2016

$000 $000 $000 $000 $000

Aparima 33 2 1 (2) 34

Ferry Road 1,010 291 48 (206) 1,143

Kingswell 20 5 1 (2) 24

Mataura 1,828 397 81 (478) 1,828

Oreti 296 166 14 (137) 339

Otepuni 149 26 7 (21) 161

Winton 189 9 9 (7) 200

Waihopai 108 22 5 (26) 109

3,632 918 166 (879) 3,837

Balance Plus Interest Transfers Balance

1/07/2014 Income Paid Out 30/06/2015

$000 $000 $000 $000 $000

Aparima 30 2 2 (1) 33

Ferry Road 943 293 48 (274) 1,010

Kingswell 22 4 1 (7) 20

Mataura 1,583 538 83 (376) 1,828

Oreti 260 163 14 (141) 296

Otepuni 130 24 7 (12) 149

Winton 180 10 9 (10) 189

Waihopai 147 21 6 (66) 108

3,295 1,056 170 (887) 3,632

Council Group

2016

2015


(b) Special Reserves (Council and Group)

Balance Transfers Transfers Balance

30/06/2015 to from 30/06/2016

$000 $000 $000 $000

Building Reserve 85 118 (177) 26

Lease Building Reserve 474 22 - 496

Furniture and Equipment Reserve 90 31 (16) 105

Plant Renewal Reserve (361) 259 (289) (391)

Computer Reserve (311) - - (311)

Vehicle reserve 336 270 (309) 297

Infrastructure Assets Reserve 443 44 - 487

Disaster Damage General Reserve 2,000 - - 2,000

Makarewa Disaster Damage Reserve-Restricted 141 9 - 150

Oreti Disaster Damage Reserve-Restricted 1,302 59 - 1,361

Lower Mararoa Disaster Damage Reserve-Restricted 57 3 (60) -

Upper Mararoa Disaster Damage Reserve-Restricted 16 1 (17) -

Mataura Disaster Damage Reserve-Restricted 1,114 50 - 1,164

Aparima Disaster Damage Reserve-Restricted 448 33 - 481

Upukerora Disaster Damage Reserve-Restricted 28 1 - 29

Whitestone Disaster Damage Reserve-Restricted 56 3 - 59

Orauea Disaster Damage Reserve-Restricted 7 - - 7

Invercargill Disaster Damage Reserve-Restricted 597 87 - 684

Waiau Disaster Damage Reserve-Restricted 1,546 115 (70) 1,591

Gratuity Reserve 76 3 (79) -

Regional Assistance to Projects 6 - - 6

Coastal Rental Reserve 116 65 (139) 42

Marine Fee Reserve-Restricted 2,047 1,696 (1,566) 2,177

South Port Special Dividend Reserve 2,028 - (801) 1,227

South Port Share Buy Back Reserve 2,985 - - 2,985

Election Funding Reserve 30 30 - 60

Pest Property Reserve Fund 278 38 (28) 288

Pest Plant Reserve 58 3 - 61

Pest Disposals Reserve 299 - - 299

Te Anau Basin Reserve 61 105 (22) 144

Waimatuku Stream Disaster Reserve - Restricted 56 - - 56

Aerial Photography Reserve 49 - - 49

Emergency Management Southland Reserve 27 - (6) 21

Emergency Mgmt Southland Capital Res 192 - - 192

Lake Hawkins Pumphouse-Restricted 263 16 - 279

Building Security and Parking Reserve - 388 (110) 278

16,638 3,449 (3,689) 16,398

2016


Balance Transfers Transfers Balance

30/06/2014 to from 30/06/2015

$000 $000 $000 $000

Building Reserve 230 90 (235) 85

Lease Building Reserve 452 22 - 474

Furniture and Equipment Reserve 82 32 (24) 90

Plant Renewal Reserve (287) 260 (334) (361)

Computer Reserve (301) - (10) (311)

Vehicle Reserve 173 280 (117) 336

Infrastructure Assets Reserve 398 45 - 443

Disaster Damage General Reserve 2,000 - - 2,000

Makarewa Disaster Damage Reserve-Restricted 139 9 (7) 141

Oreti Disaster Damage Reserve-Restricted 1,240 62 - 1,302

Lower Mararoa Disaster Damage Reserve-Restricted 54 3 - 57

Upper Mararoa Disaster Damage Reserve-Restricted 15 1 - 16

Mataura Disaster Damage Reserve-Restricted 1,035 79 - 1,114

Aparima Disaster Damage Reserve-Restricted 417 31 - 448

Upukerora Disaster Damage Reserve-Restricted 28 - - 28

Whitestone Disaster Damage Reserve-Restricted 56 - - 56

Orauea Disaster Damage Reserve-Restricted 7 - - 7

Invercargill Disaster Damage Reserve-Restricted 547 50 - 597

Waiau Disaster Damage Reserve-Restricted 1,484 136 (74) 1,546

Gratuity Reserve 72 4 - 76

Regional Assistance to Projects 6 - - 6

Coastal Rental Reserve 220 65 (169) 116

Marine Fee Reserve-Restricted 2,391 1,587 (1,931) 2,047

South Port Special Dividend Reserve 2,028 - - 2,028

South Port Share Buy Back Reserve 2,985 - - 2,985

Election Funding Reserve - 30 - 30

Pest Property Reserve Fund 272 15 (9) 278

Pest Plant Reserve 58 - - 58

Pest Disposals Reserve 299 - - 299

Te Anau Basin Reserve 40 21 - 61

Waimatuku Stream Disaster Reserve - Restricted 56 3 (3) 56

Aerial Photography Reserve 49 - - 49

Emergency Management Southland Reserve - 27 - 27

Emergency Mgmt Southland Capital Res - 192 - 192

Lake Hawkins Pumphouse-Restricted 247 16 - 263

16,492 3,060 (2,913) 16,639

2015


(c) Rating Districts Balances (Council and Group) - Restricted Reserves

Balance Plus Rates Other Net Cost to Balance

30/06/2015 15/16 Income Transfers District 30/06/2016

$000 $000 $000 $000 $000 $000

Aparima 417 276 195 (13) (418) 457

Clifton Drainage 11 4 1 - (1) 15

Duck Creek 47 54 9 - (72) 38

Invercargill 101 388 163 (60) (510) 82

Lake Hawkins 63 93 48 (5) (145) 54

Makarewa 182 197 251 (3) (291) 336

Mataura 215 1,029 511 - (1,503) 252

Otepuni Creek 15 15 2 - (2) 30

Oreti 447 845 395 32 (1,264) 455

Te Anau Basin 395 203 329 (4) (437) 486

Waituna Creek 27 128 9 - (33) 131

Waihopai 34 29 3 - (10) 56

Waiau 483 1 344 (45) (265) 518

Waiau - Sharpridge 17 4 5 - - 26

Waiau - Orauea 11 21 30 - (50) 12

Waiau -Upper Lillburn 253 30 43 - (45) 281

Waiau - Wairaki 27 13 14 - (20) 34

Waiau - Fenham 77 5 9 - - 91

Waiau - Boundary Creek 6 - 1 - - 7

Waiau Special Projects 426 - 20 70 - 516

Waimatuku 26 47 7 3 (46) 37

Upper Waihopai 26 17 2 - (3) 42

Upper Waikiwi 62 14 5 - (14) 67

Lower Waikawa 8 2 1 - - 11

Upper Waikawa 6 8 1 - (9) 6

3,382 3,423 2,398 (25) (5,138) 4,040

2016

(c) Rating Districts Balances (Council and Group) - Restricted Reserves cont

Balance Plus Rates Other Net Cost to Balance

30/06/2014 14/15 Income Transfers District 30/06/2015

$000 $000 $000 $000 $000 $000

Aparima 416 254 232 (2) (484) 417

Clifton Drainage 8 3 1 - (1) 11

Duck Creek 62 54 11 - (80) 47

Invercargill 110 382 168 (23) (536) 101

Lake Hawkins 68 93 26 (4) (120) 63

Makarewa 206 187 97 5 (313) 182

Mataura 241 927 517 (27) (1,443) 215 Otepuni Creek 32 15 6 - (38) 15

Oreti 360 729 475 32 (1,149) 447

Te Anau Basin 360 206 189 (14) (346) 395

Waituna Creek 119 42 21 - (155) 27

Waihopai 14 28 3 - (11) 34

Waiau 448 1 362 (63) (265) 483

Waiau - Sharpridge 28 4 6 - (21) 17

Waiau - Orauea 9 19 25 - (42) 11

Waiau -Upper Lillburn 210 31 43 - (31) 253

Waiau - Wairaki 20 12 13 - (18) 27

Waiau - Fenham 76 5 9 - (13) 77

Waiau - Boundary Creek 6 - 1 - (1) 6

Waiau Special Projects 347 - 5 74 - 426

Waimatuku 19 43 6 (6) (36) 26

Upper Waihopai 10 17 1 - (2) 26

Upper Waikiwi 57 13 6 - (14) 62

Lower Waikawa 12 2 1 - (7) 8

Upper Waikawa 5 7 1 - (7) 6

3,245 3,074 2,225 (28) (5,133) 3,382

2015


(d) Retained Earnings

2016 2015 2016 2015

$000 $000 $000 $000

Balance at beginning of year 52,304 50,798 66,139 63,366

Net surplus / (deficit) attributable to Council (382) 2,128 1,135 3,395

Net movement in lease areas (205) (337) (205) (337)

Net movement in special reserves 240 (147) 240 (147)

Net movement in rating districts (658) (139) (658) (139)

Balance at end of year 51,300 52,304 66,651 66,139

(e) Non Controlling Interests

2016 2015

$000 $000

Balance at beginning of year 10,760 10,121

Share of comprehensive income for the year 2,919 2,661

Dividend distribution for the year (2,154) (2,023)

Balance at end of year 11,525 10,760

Group

Council Group


16 Commitments for Expenditure

2016 2015 2016 2015

$000 $000 $000 $000

(a) Capital Expenditure Commitments

Buildings 313 256 1,019 656

Vehicles 156 - 156 -

469 256 1,175 656

As at 30 June 2016, the Council has the following capital expenditure commitments

(i)

(b) Operating Lease Commitments

Finance lease commitments

Finance lease liabilities at 30 June 2016 were $Nil. (30 June 2015: $Nil)

Operating lease commitments

Gross commitments under non-cancellable operating leases for the Group:

2016 2015 2016 2015

$000 $000 $000 $000

Within one year 121 154 500 533

One to five years 59 143 683 1,082

More than five years - - 32 96

180 297 1,215 1,711

2016 2015 2016 2015

$000 $000 $000 $000

Within one year 744 741 4,383 4,150

One to five years 1,245 1,819 10,105 10,119

More than five years 62 62 45,987 47,847

2,051 2,622 60,475 62,116

Operating lease commitments (as Lessor) relate to various port land, wharves and buildings in Bluff that are

leased (both short term and long term) to a number of tenants for port related activities. It also includes

Floodway land owned by Environment Southland, for the purposes of flood control, which are leased for

farming purposes under a Deed of Lease.

Future minimum lease payments under non-cancellable operating leases (as Lessor):

The Group also leases certain land and buildings. This lease is for a period of six years with a renewal option

in September 2018.

Council Group

Council Group

Council Group

Funds committed $469,000. (2015: Funds committed by way of contract for the building extension but

not yet capitalised $256,000 to the builder, project manager and contractors.)

As at 30 June 2016, $706,000. (2015: South Port New Zealand Limited had entered into a capital

expenditure commitments to complete modifications to Shed 3. The total cost of this capital was

estimated to be $400,000)

South Port New Zealand Limited has operating lease commitments in relation to one forklifts lease with

Gough Finance Limited which expires in September 2018 and a ten year land lease with KiwiRail Limited for

the lease of a parcel of land situated on the Island Harbour, Bluff, due to expire in December 2021.


17 Contingent Liabilities and Contingent Assets

Council and Group

There were no known contingent liabilities for the Group at 30 June 2016 (30 June 2015: $Nil)

18 Subsidiaries

Country of

Incorporation 2016 2015

% %

Southland Regional Council (i) New Zealand

Subsidiaries

South Port New Zealand Limited (iii) New Zealand 66.48% 66.48%

(i) Environment Southland (Southland Regional Council) is the ultimate parent entity within the consolidated group.

(ii) South Port New Zealand Limited holds the Group's interests in subsidiaries as follows:

- South Port New Zealand Limited - Port facilities, cargo handling and warehousing. (100% owned);

- Awarua Holdings Limited - Management and administration services. (100% owned).

(iii) Shares in South Port New Zealand Limited are carried at cost price.

All companies in the Group have 30 June balance dates.

Parent Entity Ownership Interest


19 Related Party Disclosures

(a) Equity Interests in Related Parties

Environment Southland is the ultimate parent of the Group and controls one entity, being South Port New Zealand

Limited (66.48% ownership) including its subsidiaries.

Equity Interests in Subsidiaries

Details of the percentage of shares held in subsidiaries are disclosed in Note 18 to the financial statements.

(b ) Transactions with Related Parties

Transactions involving the Council

During the year the following receipts / (payments) were received from / (paid to) related parties:

2016 2015

$000 $000

South Port New Zealand Limited

Dividend payment made to Council 4,273 4,012

Rates paid to Council as per normal terms of business 4 6

Donation to Cycle Trail 23 -

Regional Software Holdings Ltd

The transactions between the Council and Regional Software Holdings Limited (refer Note 11) were:

2016 2015

$000 $000

Share call - -

Admin fees and support 157 158

Regional Software Holdings Limited has no subsidiaries.

Other Transactions Involving Related Parties

Transactions Eliminated on Consolidation

Related party transactions and outstanding balances with other entities in a group are disclosed in an entity's

financial statements. Intra-group related party transactions and outstanding balances are eliminated in the

preparation of consolidated financial statements of the Group.

Council

During the year South Port New Zealand Limited provided cold storage facilities and leased warehousing,

land and wharf facilities to Sanford Limited for $557,000 (2015: $670,000). Sanford Limited debtors

balance at 30 June 2016 was $33,000 (2015: $66,000). Mr T M Foggo, a Director of South Port New

Zealand Limited is the Salmon & Aquaculture Manager of Sanford Limited. All of these transactions were

conducted on an arms length basis at market rates.

All balances owing by Sanford are due by the 20th of the month following invoice and all overdue invoices

are subject to interest on arrears. During the year ended 30 June 2016 no amounts invoiced to Sanford were

written off as bad debts or included in the doubtful debts provision at balance date (2015: Nil).

Council


20 Joint Venture - Emergency Management Southland

Contributions of revenue and expenditure to the venture by the Councils are as follows:

%

Environment Southland 39.52

Gore District Council 8.64

Invercargill City Council 25.92

Southland District Council 25.92

Environment Southland's interests in the venture are as follows:

2016 2015

$000 $000

Current Assets 202 219

Revenue 242 366

Expenses 248 364

The Council is a member of the joint venture known as Emergency Management Southland, which delivers

the civil defence and emergency management responsibilities of the four councils in the Southland region,

namely Governance of the operation is provided by the Southland Civil Defence and Emergency

Management Group, a joint standing committee of the four Councils.

21 Subsequent Events

(a) Council

Council had no significant events after balance date.

(b) Group (South Port New Zealand Limited)

There were no other significant events after balance date.

On 18 August 2016 the Board declared a final dividend for the year to 30 June 2016 for 18.50 cents per

share amounting to $4.853 million (before supplementary dividends). (2015 Final dividend declared for 17.00

cents per share amounting to $4.460 million).

2015: On 21 July 2015 the Group entered into a conditional agreement to purchase a second-hand tug 'Te

Matua' from Port of Tauranga. The cost of this purchase will be approximately $2.5million.


22 Notes to the Cash Flow Statement

(a) Reconciliation of Cash and Cash Equivalents

2016 2015 2016 2015

$000 $000 $000 $000

Cash 877 10 1,785 2,163

877 10 1,785 2,163

(i) Bank Overdraft - 2,400 - 2,400

Cash and cash equivalents 877 (2,390) 1,785 (237)

(b )

2016 2015 2016 2015

$000 $000 $000 $000

Surplus / (Deficit) (382) 2,128 4,054 6,057

Add (less) non-cash items

Depreciation 704 710 3,723 3,399

(Gain) / loss on disposal of property, plant and equipment (15) 24 (167) 31

Impairment of fixed assets - - - -

(Gain) / loss on wind up of available for sale asset - - - -

Net change in fair value of forward exchange contracts and

interest rate swaps

- - 138 177

Net change in fair value of other financial assets (1,853) (3,896) (1,853) (3,896)

Net change in deferred tax - - 61 42

Adjust for items that may be reclassified to surplus /

(deficit) - derivative

- - - (203)

(1,164) (3,162) 1,902 (450)

Add/(less) movement in working capital:

Trade and other receivables 549 (831) 154 (598)

Inventories 14 - 14 -

Prepayments (63) (47) (43) (47)

Trade and other payables (31) 304 397 1,284

EMS Depreciation 31 - 31 -

Employee Entitlements 229 234 229 234

Borrowings - - - -

Taxation payable - - 35 125

729 (340) 817 998

Add/(less) items classified as Investing Activities:

Property, plant and equipment included in trade and other

payables

(13) - (13) -

Investment property included in trade and other receivables (9) - (9) -

Foreign Exchange (gain) / loss - - -

(22) - (22) -

Net cash inflow (outflow) from operating activities (839) (1,375) 6,751 6,604

For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in bank and

deposits in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the

financial year as shown in the as follows: Statement of Cash Flows is reconciled to the related items in the Statement

of Financial Position

Council has an overdraft facility with ANZ Bank New Zealand Limited, with a limit of $2.5 million as at 30 June

2016. The facility can be drawn to a maximum of $15 million upon application. This is subject to annual review,

with the next review date on 31 May 2017. The interest rate is 4.02%.

Council Group

Reconciliation of Surplus for the period to Net Cash Flows From Operating Activities

Council Group


23 Severance Payments (Council only)

For the year ended 30 June 2016 Council made severance payments to one staff member for $17,000 and committed to an

amount of $25,000 to be paid in July 2016. (2015: Severance $nil).

24 Remuneration (Council only)

(a)

Remuneration Communication

Allowance

Meeting fees Mileage Total

Chair

Ali Timms 91,167 731 - - 91,897

91,167 731 - - 91,897

Elected members

Ernest Currie 35,707 780 - - 36,487

Grant Hubber 35,707 885 - 910 37,502

Jan Riddell 42,849 780 - 1,786 45,415

Marion Miller 35,707 780 - 62 36,549

Maurice Rodway 35,707 155 - - 35,862

Neville Cook 42,849 885 560 - 44,294

Nicol Horrell 48,205 885 - 8,967 58,057

Peter Jones 35,707 885 513 3,864 40,970

Robert Guyton 35,707 780 - 573 37,060

Ross Cockburn 42,849 780 - 8,697 52,326

Lloyd McCallum 35,707 885 - 1,577 38,169

426,702 8,481 1,073 26,435 462,691

517,869 9,212 1,073 26,435 554,589

Remuneration Communication

Allowance

Meeting

fees

Mileage Total

Chair

Ali Timms 86,709 731 - - 87,440

86,709 731 - - 87,440

Elected members

Ernest Currie 31,381 780 32,161

Grant Hubber 31,381 885 977 673 33,916

Jan Riddell 31,381 780 1,364 1,959 35,484

Marion Miller 31,381 780 32,161

Maurice Rodway 37,113 155 680 259 38,207

Neville Cook 31,381 885 2,972 74 35,312

Nicol Horrell 44,170 885 433 12,004 57,492

Peter Jones 31,381 885 1,455 5,067 38,788

Robert Guyton 31,381 780 770 32,931

Ross Cockburn 39,227 780 1,507 9,337 50,851

Lloyd McCallum 31,381 885 - 921 33,187

371,558 8,480 9,388 31,064 420,490

458,267 9,211 9,388 31,064 507,930

Chief Executive

Cost During 2015/16

Cost During 2014/15

During the year to 30 June 2016, the total remuneration and value of other non-financial benefits received by or payable to the

Chair, other elected members and the Chief Executive of the Council were as follows:

For the year ending 30 June 2016 the total cost to the Council of the remuneration package being received by the Chief

Executive, including the fringe benefit tax of $4,515 (2015: $5,624) is calculated at $288,372 (2015 $279,627)


(b) Council staff employed on the last day of the financial year received total remuneration as set out below:

2016 2015

Actual Actual

Number of full-time employees 145 141

Fulltime equivalent of all other employees 12 4

Number of employees receiving total annual remuneration below $60,000 37 39

Number of employees receiving total annual remuneration between $60,000 and $79,999 57 50




Council defines a full-time equivalent employee as working 37.5 hours per week.


25 Financial Instruments

(a) Capital Risk Management

The Council has the following Council created reserves:

- Lease area balances

- Special reserves

- Rating district balances

The Group’s overall strategy remains unchanged from 2015.

(b) Significant Accounting Policies

(c) Categories of Financial Instruments

2016 2015 2016 2015

$000 $000 $000 $000

Financial Assets

Cash and cash equivalents 877 10 1,785 2,163

Trade and other receivables - Amortised Cost 2,031 2,580 6,721 6,880

Other financial assets

- Fair Value through profit or loss - held for trading 29,758 32,905 29,758 32,905

- Investment in Subsidiary 8,830 8,721 - -


Bank overdraft - 2,400 - 2,400

Trade and other payables - Amortised Cost 3,288 3,319 7,091 6,273

Borrowings - Amortised Cost - - 10,700 8,200

Other financial liabilities

- Fair Value through profit or loss - - 370 232

The Council’s capital is its equity (or ratepayer’s funds), which comprise retained earnings and reserves. Equity is

represented by net assets.

The Local Government Act 2002 (the Act) requires the Council to manage its revenue, expenses, assets,

liabilities, investments and general financial dealings prudently and in a manner that promotes the current and

future interests of the community. Retained Earnings is largely managed as a by product of managing revenues,

expenses, assets, liabilities, investments and general financial dealings.

The objective of managing these items is to achieve intergenerational equity, which is a principle promoted by

the Act and applied by the Council. Intergenerational equity requires today's ratepayers to meet the costs of

utilising the Council's assets and not expecting them to meet the full cost of long term assets that will benefit

ratepayers in future generations. Additionally the Council has in place asset management plans for major asset

classes detailing renewal and maintenance programmes, to ensure ratepayers in future generations are not

required to meet the costs of deferred renewals and maintenance.

The Act requires the Council to make adequate and effective provision in its Long Term Plan (LTP) and in its

annual plan (where applicable) to meet the expenditure needs identified in those plans. The Act sets out the

factors that the Council is required to consider when determining the most appropriate sources of funding for

each of its activities. The sources and levels of funding are set out in the funding and financial policies.

These reserves are for different areas of benefit and are used where there is a discrete set of rate or levy payers

as distinct from a general rate. Any surplus or deficit relating to these separate areas of benefit is applied to the

specific reserves.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, and

the basis of measurement applied in respect of each class of financial asset, financial liability and equity

instrument are disclosed in Note 1.

GroupCouncil


(d)

(e) Currency Risk

2016 2015 2016 2015

NZ $000 NZ $000 NZ $000 NZ $000

Council

US Dollars 3,711 3,796 - -

British Pounds 970 1,617 - -

Euro 3

Australian Dollars 2,862 2,951 - -

Group

US Dollars 3,711 3,796 - -

British Pounds 970 1,617 - -

Euro 3

Australian Dollars 2,862 2,951 - -

(f)

Interest payable by South Port (NZ) ltd to HSBC is charged on the following basis:

(i) 5 year interest rate swap; and

(ii) 3 year interest rate cap; and

(iii) Variable rates based on the BKBM.

The Council has a series of policies to manage the risks associated with financial instruments. The Council is

risk adverse and seeks to minimise exposure from its treasury activities. The Council has established Council

approved Liability Management and Investment Policies. These provide a framework for prudent debt

management and the management of financial resources in an efficient and effective way.

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates

and interest rates.

Liabilities

The Group undertakes certain sale and purchase transactions and makes investments through its managed

funds denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Exchange rate

exposures are managed within approved policy.

The carrying amounts of the foreign currency denominated monetary assets and monetary liabilities at the

reporting date are as follows:

Assets

The Council and Group does not enter into financial instruments, including derivative financial instruments, for

speculative purposes.

During the period the range of variable interest rates applying to the credit facility were between 3.045% and

4.34% (2015: 4.33% and 4.74%). The Company is exposed to normal fluctuations in market interest rates.

Interest rate swap – South Port NZ Ltd has an interest rate swap in place which matures in November 2019.

The interest rate swap has a fixed swap rate of 4.45% with a notional contract amount of $5 million at 30 June

2016 (2015: $5 million at 4.45% maturing June 2015).

Interest rate cap – South Port NZ Ltd has an interest rate cap in place which matures in March 2017. The

interest rate cap has a fixed cap rate of 5.00% with a notional contract amount of $3 million at 30 June 2016

(2015: $3 million).

The Council and Group is exposed to interest rate risk as it has tradable bonds, notes and cash investments as

part of its managed funds held with ANZ Investments and Forsyth Barr. The risk is managed by the

diversification of the Council's investment portfolio in accordance with the limits set out in the Council's

investment policy. The Group is also occasionally subject to interest rate risk in relation to borrowings at

floating interest rates.

Financial Risk Management Objectives

Interest Rate Risk


(g) Other Price Risks

Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices.

The Group is exposed to equity price risks arising from equity investments. Council has equity investments held

for trading as part of its managed funds held with ANZ Investments and Forsyth Barr (refer to note 8). The

Group also holds equity investments which are designated as available-for-sale.

The price risk is managed by diversification of the Council's investment portfolio in accordance with the limits

set out in the Council's Investment policy.

(h) Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial

loss to the Group.

With respect to managed funds, credit risk is reduced by the number of securities held with different

counterparties.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are

banks with credit-ratings assigned by international credit-rating agencies.

Financial instruments which potentially subject the Group to credit risk principally consist of cash and cash

equivalents and trade and other receivables and term investments.

The Council has no significant concentrations of credit risk arising from trade receivables, as it has a large

number of credit customers, mainly ratepayers, and Council has powers under the Local Government (Rating)

Act 2002 to recover outstanding debts from ratepayers.

The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses,

represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral

obtained.

(i) Liquidity Risk Management

The Group manages liquidity risk by maintaining adequate funds on deposit, reserves, banking facilities and

reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the

maturity profiles of financial assets and liabilities. Included in Note 14 is information on additional undrawn

facilities that the Group has at its disposal to further reduce liquidity risk.

The following tables detail the Council's remaining contractual maturity for its non derivative financial liabilities.

The tables below have been drawn up based on the undiscounted contractual maturities of the liabilities except

where the Council is entitled and intends to repay a liability before its maturity.

Liquidity risk is the risk that the Group will encounter difficulty in raising liquid funds to meet commitments as

they fall due. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding

through adequate committed credit facilities, and the ability to close out market positions.


Maturity Profile of Financial Instruments

The following table details the Council's exposure to interest rate risk on financial instruments:

Weighted Average

Effective Interest

Rate

Fixed

Maturity

Dates

Less than 12

months

1-2 years 2-3 Years 3-4 Years 4 -5 Years > 5 Years

% $000 $000 $000 $000 $000 $000 $000 $000

Financial Liabilities - -

Bank overdraft 4.02% - - - - - - - -

Trade and other payables - 3,288 - - - - - 3,288 3,288

Borrowings - - - - - - - - -

Weighted Average

Effective Interest

Rate

Fixed

Maturity

Dates

Less than 12

months


% $000 $000 $000 $000 $000 $000 $000 $000

Financial Liabilities - -

Bank overdraft 4.02% 2,400 - - - - - 2,400 2,400

Trade and other payables - 3,319 - - - - - 3,319 3,319

Borrowings - - - - - - - - -

Weighted Average

Effective Interest

Rate

Fixed

Maturity

DatesLess than 12

months


% $000 $000 $000 $000 $000 $000 $000 $000


Bank overdraft 5.50% - - - - - - - -

Trade and other payables 7,091 - - - - - 7,091 7,091

Borrowings (non-current) 4.45% 123 123 123 4,041 - - 4,410 4,000

Borrowings (current) 3.29% 6,855 - - - - - 6,855 6,700

Interest rate derivatives 4.45% 103 103 103 52 - - 361 370

Weighted Average

Effective Interest

Rate

Fixed

Maturity

DatesLess than 12

months


% $000 $000 $000 $000 $000 $000 $000 $000


Bank overdraft 5.50% 2,400 - - - - - 2,400 2,400

Trade and other payables 6,273 - - - - - 6,273 6,273

Borrowings (non-current) 4.41% 356 4,510 174 174 4,059 - 9,273 8,200

Borrowings (current) - - - - - - -

Interest rate derivatives 4.45% 41 41 41 41 21 - 185 232

Total

Carrying

Amount

Contractual

cash flows

Contractual

Cash flows

Contractual

Cash flows

Contractual

cash flows

GROUP 2016

GROUP 2015

Contractual

cash flows

Contractual

Cash flows

Contractual

Cash flows

COUNCIL 2016

COUNCIL 2015


(j) Fair Value of Financial Instruments

The fair values of financial assets and financial liabilities are determined as follows:

Group 2016 Total

Level 1 Level 2 Level 3

NZ $000 NZ $000 NZ $000 NZ $000

Financial Assets

Other financial assets 29,758 - 29,758 -


Derivatives - interest rate swaps (370) - (370) -

Group 2015 Total

Level 1 Level 2 Level 3

NZ $000 NZ $000 NZ $000 NZ $000

Financial Assets

Available for sale investments (shares) - - -

Other financial assets 32,905 - 32,905 -


Derivatives - interest rate swaps (232) - (232) -

- Level 2 fair value measurements are those derived from inputs other than quoted prices included within

Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from

prices) and

- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for

identical assets or liabilities

- the fair value of financial assets and financial liabilities with standard terms and conditions and traded on

active liquid markets are determined with reference to quoted market prices; and

- the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available

use is made of discounted cash flow analysis using the applicable yield curve for the duration of the

instruments.

The Council considers that the carrying amount of financial assets and financial liabilities recorded at amortised

cost in the financial statements approximates their fair values with the exception of the Council's investment in

its subsidiary, South Port New Zealand Limited (South Port). The Council records its investment in South

Port at cost ($8,720,786) and at 30 June 2016 the fair value of this investment based on the NZX quoted bid

price was $80,231,236 (2015: $79,882,404).

- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset

or liability that are not based on observable market data (unobservable inputs).

Valuation Technique

Valuation Technique

- the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined

in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from

observable current market transactions.

The following table provides an analysis of financial instruments that are measured subsequent to initial

recognition at fair value, grouped into levels 1 to 3 based on the degree to which fair value is observable:


(k) Sensitivity Analysis

Foreign Currency Sensitivity Analysis

-

- Equity reserves would be similarly affected.

Interest Rate Sensitivity Analysis

-

- Equity reserves would be similarly affected.

The Group’s sensitivity to interest rates has not changed significantly from the prior year.

Price Sensitivity Analysis

-

The Group’s sensitivity to equity prices has not changed significantly from the prior year.

At reporting date, if foreign currency rates had been 10% higher or lower and all other variables were held

constant, the Group’s:

At reporting date, if interest rates had been 10% higher or lower and all other variables were held constant, the

Group’s:

The Group is mainly exposed to the currency of Australia (AUD), Great Britain (GBP) the United States

(USD) and Europe (Euro).

Surplus would decrease or increase by $833,860 (2015: $939,498) in relation to the equity investments fair

value through profit and loss.

At reporting date, if equity prices had been 10% higher or lower and all other variables were held constant, the

Group’s:

The sensitivity analysis below has been determined based on the exposure to interest rates for financial

instruments at the reporting date and the stipulated change taking place at the beginning of the financial year

and held constant throughout the report

Surplus would decrease or increase by $754,600 (2015: $836,432). This is mainly attributable to the Group’s

exposure to foreign currency on its investments within its managed funds held with Forsyth Barr.

Surplus would decrease or increase by $175,614 (2015: $206,102). This is mainly attributable to the Group’s

exposure to interest rates on its investments within its managed funds held with ANZ and Forsyth Barr.

The sensitivity analysis below has been determined based on the exposure to equity price risks at the reporting

date.


Council Council Variance Note

2016 Annual Plan

$000 $000 $000

Revenue

Rates revenue 14,610 14,619 (9)

Development Contributions - - -

Government Grants 1,108 636 472 a.

Other revenue 12,091 11,631 460 b.

Other gains /(losses) 1,853 1,616 237 c

Total Revenue 29,662 28,502 1,160

Expenditure

Employee benefits expense (14,182) (13,653) (529) d.

Depreciation expense (704) (794) 90 e.

Finance costs (124) (60) (64) f

Other expenses (15,034) (15,749) 715 g

Total Operating Expenditure (30,044) (30,256) 212

Surplus (Deficit) before tax (382) (1,755) 1,372

Income tax expense - - -

Tax legislation changes - - -

Surplus (deficit) for the period (382) (1,755) 1,372

- - -

Total Comprehensive Revenue / Deficit (382) (1,755) 1,372

Explanations for Statement of Comprehensive Revenue and Expense Variances:

a.

b.

c.

d.

e.

f.

g.

Further explanations for these operating variances are reported under each activity along with programme costings.

Other Gains/(losses) is over budget by $237,000 due to higher than expected investment returns.

Actual operating expenditure was $212,000 below budget primarily due to:

Depreciation expense is less than budget due in part to EMS depreciation allocated to other councils $31,000 (60.48%).

Finance costs are $64,000 above budget due to the use of the overdraft facility for a longer time period.

26 Explanation of Major Variances against Annual Plan

Council Statement of Comprehensive Revenue and Expenses for the Year Ended 30 June 2016

The actual operating deficit of $382,000 was better than the planned budgeted deficit by $1.372m. The major components of

this favourable result are explained below.

Total comprehensive revenue received for the year was $1.160 million more than budget. The major items contributing to this

variance were:

Government grants are $472,000 above budget due to funding received for the unexpected Velvet Leaf biosecurity

response.

Employee benefits are over budget by $529,000 mainly due to additional staff hired on approval by council that were not

budgeted, along with SORDS staff that were not budgeted for.

Other expenses are below budget by $715,000 mainly due to an underspend in Laboratory Services.

Available for sale financial assets valuation gain/(loss)

taken to equity

Other revenue is $460,000 above budget mainly due to unbudgeted prosecutions income.



2016 Annual Plan

$000 $000 $000

Equity 75,576 72,001 3,575 a.

Current Assets 33,026 29,324 3,702 b.

Non-Current Assets 47,411 46,221 1,190 c.

Current Liabilities 4,829 3,534 1,295 d.

Non Current Liabilities 32 10 22

Net Assets 75,576 72,001 3,575

Explanations for Statement of Financial Position Variances:

a.

b.

Council's managed funds portfolio.c.

d.


2016 Annual Plan

$000 $000 $000

Net cash flow from operating activities (839) (2,725) 1,886

Net cash flow from investing activities 4,106 1,470 2,636

Net cash flow from financing activities - - -

Increase/(Decrease) in cash held 3,267 (1,255) 4,522

Add opening cash brought forward (2,390) 1,379 (3,769)

Ending cash carried forward 877 124 753 a.

Explanations for Statement of Cash Flows Variances:

aa. The cash position is better than budgeted by $753k. This is mainly due to more receipts from customers, $784k more in

expected dividend receipts which is offset in part by a starting cash position being lower than planned.

Actual compared to Annual Plan

Actual compared to Annual Plan

Current liabilities of $4.829m are ahead of budget by $1.295m due to an increase in trade and other payables.

Better than expected operational results highlight a favourable equity position of $75.576m which is $3.575m higher than

budget.

Statement of Cash Flows

Current assets are $33.026m against a budget of $29.324m due to a higher than expected bank balance and a strong

performance of Council's managed funds portfolio.

Non current assets at $47.411m is $1.190m higher than budget due mainly to an increase in Property, Plant and Equipment.

Statement of Financial Position


Additional Disclosure Information Rating base information as at the end of the preceding financial year

2015 2014 The number of rating units within the region 50,983 52,440 The total capital value of rating units within the region $28,383,060,838 $28,524,492,705 The total land value of rating units within the region $16,945,964,600 $16,891,735,575

Insurance on Assets

2015 $000s

2014 $000s

Total value of all assets of Council covered by insurance contracts. 10,525 9,271 Maximum amount to which insured. 22,891 18,175 Total value of all assets of Council covered by financial risk sharing arrangements.

27,171 27,255

Maximum amount available to Council under the arrangements. 50,000 100,000 Council is a member of Riskpool for flood protection and control works. Total value of all assets of the Council which are partly self-insured. 27,171 27,255 Value of funds maintained by the local authority for that purpose.

7,312 7,325

Council holds funded reserves to cover shortfalls in risk sharing arrangements e.g. deductible, non-insured damage. Individual amounts are detailed in the Note 15b.


Local Government (Financial Reporting and Prudence) Regulations 2014 Annual report disclosure statement for year ended 30 June 2016 What is the purpose of this statement? The purpose of this statement is to disclose the Council’ s financial performance in relation to various benchmarks to enable the assessment of whether the Council is prudently managing its revenues, expenses, assets, liabilities, and general financial dealings. The Council is required to include this statement in its annual report in accordance with the Local Government (Financial Reporting and Prudence) Regulations 2014 (the regulations). Refer to the regulations for more information, including definitions of some of the terms used in this statement. 1. Rates affordability benchmarks The Council meets the rates affordability benchmark if: ▲ its actual rates income equals or is less than each quantified limit on rates; and ▲ its actual rates increases equal or are less than each quantified limit on rates increases. Rates (income) affordability The following graph compares the Council’s actual rates income with a quantified limit on rates contained in the Financial Strategy included in the Council’s Long-term Plan. The quantified limit from 2011 until 2015 was that total rates will not exceed $18.968 million. From 2015/16 the quantified limit is that total rates will not exceed 60% of total revenue.

Rates (increases) affordability The following graph compares the Council’s actual rates increases with a quantified limit on rates increases included in the Financial Strategy included in the Council’ s Long-term Plan. The quantified limit is that total rates increases will not exceed planned increases.


The Rates (increases) Affordability benchmark requires a comparison of actual performance against quantified limits set in the Council’s Financial Strategy. Quantified limits were not set by the Council for the 2011 and 2012 years and actual performance only is shown in the graph for this benchmark. In 2015/16 the quantified limit is that total rates increase will not exceed 7% for the first three years of the Council’s 2015-2025 Long-term Plan. 2. Debt affordability benchmark The Council meets the debt affordability benchmark if its actual borrowing is within each quantified limit on borrowing. The following graph compares the Council’s actual borrowing with a quantified limit on borrowing stated in the Financial Strategy included in the Council’s Long-term Plan. The quantified limit is that, other than overdrafts arranged to fund operating cash shortfalls immediately prior to the annual rate collection is that the proportion of total borrowing subject to repayment or refinancing should be no greater than 25% of total borrowing or $100,000, whichever is greater.

During the period 2011/12 to 2015/16, the Council had no external public debt. The Debt Affordability benchmark requires a comparison of actual performance against quantified limits set in the Council’s Financial Strategy. Quantified limits were not set by the Council for the 2011/12 year. Actual performance only is shown in the graph for this benchmark. 3. Balanced budget benchmark


The following graph displays the Council’s revenue (excluding development contributions, financial contributions, vested assets, gains on derivative financial instruments, and revaluations of property, plant, or equipment) as a proportion of operating expenses (excluding losses on derivative financial instruments and revaluations of property, plant, or equipment). The Council meets this benchmark if its revenue equals or is greater than its operating expenses.

In 2013/14 and 2015/16 Council planned not to meet its balanced budget requirement. Council planned to incur more operating expenditure than revenue received as it had resolved that it was financially prudent to do so by making use of prior years’ surpluses and reserves.

4. Essential services benchmark The following graph displays the Council’s capital expenditure on network services as a proportion of depreciation on network services. The Council meets this benchmark if its capital expenditure on network services equals or is greater than depreciation on network services. Network services means infrastructure related to: (a) water supply; (b) sewerage and the treatment and disposal of sewage; (c) stormwater drainage; (d) flood protection and control works; (e) the provision of roads and footpaths. The Council’s only network services are in relation to flood protection and control works. The Council does not provide any of the other network services. These network services are in the form of land assets (stopbanks and earthworks). Accordingly, there is no depreciation on these assets. The Council’s capital expenditure will always be equal to or greater than the depreciation expense. Council’s stopbanks are in good order and are constructed to as built standards in line with Council’s Infrastructure Strategy.


As there is no depreciation, this graph is blank, however it is required by Schedule 5 of the Local Government (Financial Reporting and Prudence) Regulations 2014. 5. Debt servicing benchmark The following graph displays the Council’s borrowing costs as a proportion of revenue (excluding development contributions, financial contributions, vested assets, gains on derivative financial instruments, and revaluations of property, plant, or equipment). Because Statistics New Zealand projects the Council’s population will grow more slowly than the national population growth rate, it meets the debt servicing benchmark if its borrowing costs equal or are less than 10% of its revenue.

During the period 2011/12 to 2015/16, the Council had no external public debt and, consequently no borrowing costs, therefore the graph is blank.

6. Debt control benchmark The following graph displays the Council’s actual net debt as a proportion of planned net debt. In this statement, net debt means financial liabilities less financial assets (excluding trade and other receivables). The Council meets the debt control benchmark if its actual net debt equals or is less than its planned net debt.

-

20

40

60

80

100

120

140

2011/12 2012/13 2013/14 2014/15 2015/16

Capital

Expenditure

/Depre

cia

tion

(%)

-

2

4

6

8

10

12

14

16

18

20

2011/12 2012/13 2013/14 2014/15 2015/16

Borr

ow

ing C

osts

/Reve

nue

(%)


During the period 2011/12 to 2015/16, the Council had no external public debt. This benchmark is recording actual net financial assets as a proportion of planned net financial assets. For the Council, the debt control benchmark is met if its actual net assets, financial assets (excluding trade and other receivables) less financial liabilities, equals or is more than its planned net assets.

7. Operations control benchmark This graph displays the Council’s actual net cash flow from operations as a proportion of its planned net cash flow from operations. The Council meets the operations control benchmark if its actual net cash flow from operations equals or is greater than its planned net cash flow from operations.

116%

102%

105%

110%

107%

80

85

90

95

100

105

110

115

120

2011/12 2012/13 2013/14 2014/15 2015/16

Actu

al/B

udgete

d N

et

Debt

(%)

Benchmark Met Benchmark not met

-38%

-10%

71%

51%

30%

-120

-100

-80

-60

-40

-20

-

20

40

60

80

100

120

2011/12 2012/13 2013/14 2014/15 2015/16

Actu

al/B

udget

net

cash flo

w f

rom

opera

tions (

%)

Benchmark not met


For the period 2011/12 to 2015/16 Council planned to have negative cash flow from its operating activities, as it considered it was prudent to do so as it drew down on prior years surpluses and reserves. Due to increased dividend payments from South Port New Zealand Limited and decreased operational expenditure the actual cash flow from operating activities in each of the five years was better than what was planned. All of the bars in this benchmark chart are orange. This indicates that Council has not met its operations benchmark for the last five years in that it did not spend as much as it had planned. This underspending means that in each of the five years Council has had more cash from operating activities than what was planned.


Section 5: Audit Opinion (Arotake)




Future Challenges

Continuing direct involvement in water

management planning & decisions

Involvement in coastal planning &

management

Involvement in understanding

impacts of climate change

Assisting in setting water take &

discharge limits

Improving capacity of Maori to participate in Council decisions

Section 6: Supplementary Material (Ko Ētehi Atu Kōrero/Mea)

Opportunities for Māori to contribute to Decision-making

Environment Southland acknowledges the importance of tikanga Māori and values its relationship with both Ngāi Tahu (through the four Southland papatipu rūnanga) and ngā matawaka (other Māori who are not Ngāi Tahu) living within Murihiku/Southland. Charter of Understanding To help promote and develop its relationship with Māori, Environment Southland together with six other local authorities in Southland/Otago, namely Southland District Council, Invercargill City Council, Gore District Council, Queenstown Lakes District Council, Clutha District Council and Otago Regional Council signed with Te Ao Mārama Inc the Charter of Understanding He Huarahi mō Ngā Uri Whakatapu - A Pathway for the Generations Coming Through. The revised Charter was re-signed by all the parties at Hokonui runanga marae on 7 March 2016. The Charter of Understanding provides: ▲ the basis for an ongoing relationship between the seven councils and the tangata whenua of Murihiku to assist in

developing the capacity of Māori to contribute to decision-making processes; ▲ a foundation for consultation on a wide range of local government issues; ▲ for the recognition and willingness of Te Ao Mārama Inc to assist all councils in consultation with all ngā matawaka

living in Murihiku. This is important in terms of Māori contribution to decision-making in the Southland region, particularly as the Local Government Act responsibilities of the Council in relation to Māori are with all Māori, not solely the local Iwi.

Te Roopū Taiao is the collaborative structure put in place for the purposes of giving effect to the Charter of Understanding and the obligations of the parties to the charter. Senior Councillors and Council staff involved in resource management regularly attend Te Roopū Taiao meetings. Consistent with the changes to the Charter referred to above, Te Roopū Taiao includes ngā matawaka (other Māori who are not Ngāi Tahu) representatives; and meetings are usually held quarterly. Fostering Māori Capacity The points below highlight progress with a number of initiatives undertaken during 2015/16 aimed at fostering Māori capacity to contribute to decision-making processes: ▲ continued to hold regular liaison meetings between Te Ao Mārama Inc managers and Council Executive, and weekly

contact at staff level; ▲ invited Māori representatives to attend Council meetings and hearings to become familiar with Council protocol; ▲ provided for Iwi appointed hearing commissioners on key issues, such as major resource consent applications or plan

developments that have issues of iwi significance; ▲ continued the partnership with Te Ao Mārama Inc in the development of the Southland Water and Land Plan project; ▲ maintained existing protocols with Māori in relation to the ways in which Council undertakes its statutory duties; ▲ referred to and reported against Te Tangi a Tauira, the Ngāi Tahu Murihiku Resource Management Plan when

assessing resource consent applications; ▲ maintained our commitment to ongoing funding of Te Ao Mārama Inc, with Environment Southland acting as the

central financial manager for all the Councils’ contributions and distribution of funds to Te Ao Mārama Inc; ▲ Council continued to offer the 50/50 shared arrangement to fund the Iwi Policy Officer position within Te Ao

Mārama Inc; ▲ Council continued to Chair Te Roopū Taiao meetings.

Page 98 Page 98

Future Challenges

ORC/ES Regional Transport

Collaboration

Region-wide Pest Management Plan

implementation

Impacts of climate change

Setting water take & discharge limits and

impacts on urban communities

Cleaner air quality

Collaboration across Councils – Shared Services Council fully participates in shared service arrangements via a memorandum of Understanding with the other local authorities locally and nationally. There is better value obtained through those services than trying to undertake the work on our own. The following are examples of those collaborations. Building Control

The Shared Services Forum had requested a combined Building Control Shared Service between Southland District, Invercargill City and Gore District Councils, with Clutha District Council also opting to participate in this initiative. The four councils continue to work closely together on building control matters in terms of both information sharing and staff exchanges to support each other at busy times. Emergency Management

Emergency Management Southland (EMS) is a shared service between Southland District Council, Environment Southland, Invercargill City Council and Gore District Council. It focuses on ensuring communities are prepared for emergencies and they are able to respond to and recover from these when they do happen. Specific actions include public education and ensuring a pool of trained personnel. A tsunami hazard of national significance has been identified by the Ministry of Civil Defence and Emergency Management at Milford Sound. Emergency Management Southland has hence had a strong focus in 2015/16 of raising awareness of the Milford community and businesses of this hazard. Funding from Ministry of Civil Defence and Emergency Management has been obtained to research mitigation and response options. Information Technology

The IT Shared Services Operations Sub-Committee over the past 12 months has undertaken a number of activities that aim to provide services and activities to be undertaken between the member councils. Streams of work identified for next year are a historic imagery project in conjunction with Land Information NZ and disaster recovery and business continuity and a Southland maps portal for GIS information held by all the councils. Iwi Liaison

All four Southland councils have continued to fund and support Te Ao Mārama Inc, the agency approved by Te Runanga o Ngai Tahu to act on iwi liaison matters in Murihiku/ Southland under the Resource Management Act 1991 and the Local Government Act 2002. Since its inception, Queenstown Lakes District Council, Otago Regional Council and Clutha District Council have also joined Te Ao Mārama Inc. The papatipu runanga and the participant councils continue to meet quarterly at the Te Roopū Taiao hui, which provides for excellent partnership and exchange of information. A key focus in 2015/16 has been to seek to give these meetings more of a strategic focus and less focus on day-to-day operational/retrospective reporting back. A review of the Charter of Understanding foundation document, He Huarahi mō Ngā Uri Whakatupu, which articulates the relationship between the four councils and the tangata whenua, was completed during the year. Regional Development Strategy

In October 2015, the Southland Mayoral Forum published the Southland Regional Development Strategy. A Governance Group of local community leaders and business people was formed and nine action teams put together to investigate a variety of topics and report back to the Governance Group by August 2016. The major goal of the Strategy is to increase the Southland population by 10,000 more people by 2025, through creating more jobs and taking up more development opportunities. This is a significant community collaborative project. Have a look at the Strategy website to see the scope of investigations that are underway - http://www.sords.co.nz.

http://www.sords.co.nz/


Equal Employment Opportunities Policy Statement Environment Southland and senior management place a high value on maintaining a skilled, motivated and diverse workforce working in a safe environment. The Council and management are committed to the principle of equal employment opportunity in the recruitment, employment, training and promotion of the Council’s employees. A philosophy of acceptance without prejudice of differences in race, colour, ethnic or national origin, gender, religion, marital status, family responsibilities, sexual orientation, age or disability is encouraged throughout the organisation. Objectives ▲ To select job applicants on the basis of merit, verifiable experience and ability to deliver our programmes to the community. The best applicant is chosen after extensive electronic media and/or newspaper advertising, reviewing education,

experience, fitting with Environment Southland’s values and the team “fit”. Career development opportunities for internal applicants are considered with the intention to create a balance between engaging new employees and creating a career pathway (promotion opportunities) for current Environment Southland employees.

The Internet is a significant tool for recruitment of professional staff. All Environment Southland permanent positions are advertised on our own website, as well as on nationwide recruitment sites, resulting in applications from throughout New Zealand and off-shore. Less use is now being made of the print media. Environment Southland has for the last two years been using an electronic application form accessed through our website, resulting in a more streamlined applicant experience.

▲ To provide job training programmes fairly and without bias to enable employees to best meet the requirements of their current positions and to

develop additional skills.

All employees are offered opportunities to attend short courses in skills specific to their field of work, or in personal skills, as they became available. Some of these were arranged as in-house courses in order that more people could attend. Requests from managers for specific skill training for employees were met.

▲ To maintain a workplace free of discrimination and harassment.

All Council policies are maintained to ensure the workplace remains free of discrimination and harassment. There have been no issues raised relating to discrimination or harassment during the year.


Health and Safety at Work Health and Safety Policy Environment Southland remains committed to providing and maintaining a safe and healthy working environment for all workers – this includes employees, contractors, Councillors and other visitors. Environment Southland’s three “top” safety risks are driving, working solo in the field and working in and around water. This policy was developed and agreed in conjunction with the other three Southland Councils (Invercargill City Council, Southland District Council and Gore District Council) and expresses a commitment from each council to leadership in health, safety and wellbeing. The policy is reviewed biennially and the next review is December 2017. The current Health and Safety Policy was signed by the Chief Executive (Officer), the Public Service Association (PSA) health and safety representative, and the Health and Safety Co-ordinator on 14 December 2015. The mission statement is “Working together for a safer South”. The vision statement is “A Safer You, A Safer Me, A Safer South”. The policy outlines that Environment Southland will ensure health and safety is a core value of our organisation by building a strong, accepted and proactive healthy and safe culture. Environment Southland will: ▲ communicate: ensure all workers are informed and understand this policy and any other documentation or initiatives;

▲ investigate and learn: accurately report, record, investigate and learn from all safety incidents; injuries, near misses, discomfort, pain and critical events;

▲ take practicable steps: educate workers in their responsibility to prevent harm to themselves, other workers and visitors;

▲ develop knowledge: ensure our workers are aware of and comply with health and safety legislation, regulations, codes of practice and safe operating procedures. Monitor developments in appropriate sectors along with best practice cases;

▲ prevent impairment: will not allow any worker on a site who is impaired by drugs or alcohol;

▲ use targets: establish, implement and biennially review measurable health and safety objectives and targets to ensure continual best practice by improvement of practices, procedures and performance;

▲ induct: ensure workers (including contractors) are inducted to understand their responsibilities and obligations;

▲ train and refresh: provide appropriate resources and training to achieve and maintain a safe and healthy work environment;

▲ in an emergency: take a proactive approach to emergency management and all workers will be willing to assist as required;

▲ rehabilitate: actively and respectfully manage the early rehabilitation and return to work of any employee who has suffered an injury or illness;

▲ aim for zero harm: aim to eliminate work related injuries by identifying and controlling workplace hazards, assessing and managing risks, monitoring employee health, as required, and implementing appropriate training programmes;

▲ manage contractors: develop and maintain open communication and effective relationships and processes with contractors and suppliers of goods and services;

▲ consult and encourage participation: consult with workers encouraging active participation in matters relating to health and safety management.

During the period 1 July 2015 to 30 June 2016, 32 safety incidents were reported - 13 of these reports were from the velvetleaf operation. The other 19 reports included: near miss (4), strains (8), psychosocial (4), bruising (2) and fatigue (1). The locations of the safety incidents were equally in the office environment (7) and field (7), ES grounds (2) and minor road incidents (3). All Environment Southland’s divisions are health and safety focused in their operational/field work. The next ACC Workplace Safety Management Programme (WSMP) audit is due in February 2017.


Council Directory Chairman Ali Timms

Councillors Ross Cockburn Neville Cook Rowly Currie Robert Guyton Nicol Horrell (Deputy Chairman) Grant Hubber Peter Jones Lloyd McCallum Marion Miller Jan Riddell Maurice Rodway

Executive Staff Chief Executive Director of Operations Director of Corporate Services Director of Policy, Planning & Regulatory Services Director of Science & Information

Rob Phillips Warren Tuckey Graham Alsweiler Vin Smith Graham Sevicke-Jones (from 25 January 2016)

Divisional Managers Manager - Strategy & Corporate Planning Policy and Planning Manager Environmental Information Manager Science Manager Catchment Manager Biosecurity Manager Land & Water Services Manager Compliance Manager Consents Manager Finance Manager Information Systems Manager Communications & Engagement Manager

Emergency Management Southland Manager

Ken Swinney Anita Dawe John Prince Rachael Millar Noel Hinton Richard Bowman Nikki Tarbutt (maternity leave from 3 January 2016) Simon Mapp Hilary Lennox Phil Culling Jane Carroll Gail Jefferies Angus McKay

Bankers ANZ Banking Kelvin Street, Invercargill 9810 Auditor Deloitte on behalf of the Controller and Auditor General Wellington Solicitors AWS Legal Spey Street Invercargill 9810 Other legal firms used during year (subject dependent): Anderson Lloyd, Dunedin Barry Slowley, Invercargill Ross Dowling Marquet Griffin, Dunedin Simpson Grierson, Wellington Wynn Williams, Christchurch

Postal Address Environment Southland Private Bag 90116 Invercargill 9840 Phone (03) 211 5115 0800 76 88 45 Fax (03) 211 5252 E-mail Address [email protected] Website www.es.govt.nz (you can find reports referred to within this document on our website, or contact us and we will assist you) Office Location Corner of Price Street & North Road Invercargill 9810

mailto:[email protected]

http://www.es.govt.nz/

Page 102

We collect personal information from you, including:

your name;

contact information;

location;

computer or network;

interactions with us;

billing or purchase information.

We collect your personal information in order to fulfil the legislative requirements of our business. Providing some information is optional. We keep your information safe by using secure systems and processes including policy and ensure secure access to your information by authorised staff only. You have the right to ask for a copy of any personal information we hold about you, and to ask for it to be corrected if you think it is wrong. If you would like to ask for a copy of your information, or have it corrected, please contact us at [email protected], or (03) 211 5115, or Private Bag 90116, Invercargill 9840.

mailto:[email protected]

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Publication No 2015-04 - Southland Regional Council · 11 Our Activities in Depth – Groups of...

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