Independent Review on Wellington Water's capital programme estimating and budget systems

In summary, the review found that: 

• Wellington Water is not as mature of an organisation as would be expected and has not evolved in step with the evolution of its functions and as an organisation has not kept pact with increased demand. 
• There are unclear structures and accountabilities, with like functions not grouped together. 
• A control environment that is loose and not fit for purpose, with inadequate systems and processes and some missing competencies (including strategic leadership). 
• There is a culture of not wanting to hear or present bad news, to manage bad news rather than sharing with with the board and stakeholders, and a mismatch between Wellington Water's values and its culture. 
• The Long-term Plan (LTP) process is complex and a number of other factors made the development of 2024/25 LTP unique. 
• Under-resourcing in the Finance and Risk functions. 
• The flaws were the unsystematic allocation of corporate costs, the lack of financial oversight at a macro level, the poor communication around the corporate cost percentage to be allocated, and the lack of response on several occasions when clarification was sought. 
• There was a tendency to see some of these problems as issues to be addresses by the new water entity which Wellington Water will transition into. 
• On the upside, Wellington Water had formed good relationships with shareholders, the process used was mostly good, they met the milestones and delivered outputs to councils for their Long-term Plans, and feedback from councils were generally complimentary.

The review made the following recommendations which fall into six broad categories: 

1. Rebuild the trust and confidence of shareholding councils in Wellington Water. 
2. Rebuild the trust and confidence of middle management and staff in Wellington Water's senior management. 
3. Restructure the organisation so that accountabilities are clear, and capabilities can be substantially enhanced in the lead-up to the new entity. 
4. Treat Wellington Water's readiness for reform as separate from the BAU work programme. 
5. Review Wellington Water's Annual Plan processes to deliver capital programmes for councils. 
6. Strengthen governance oversight.

To implement the Review recommendations, Wellington Water will: 

• Work through the recommendations to build an implementation plan. 
• Develop a work plan with prioritised tasks and activities, assign responsibilities and create space for these to be delivered. 
• Set up a reporting and assurance system around how these improvements are reported to our council shareholders, so they have confidence from the Board that appropriate oversight and progress is occurring. 
• Provide a regular progress report to shareholding councils and the public each quarter until such time as the priorities have been addressed. 

There are some things we will start immediately: 

• Building our internal culture and improving leadership. This will involve rebuilding the trust and confidence of staff in the organisation’s senior leadership to give staff the confidence to do their jobs, and deal with challenges; realigning behaviours to the organisation’s values and being clear on expectations around individual behaviours and actions and returning to a “no blame” culture.
• Realign Wellington Water’s budget planning cycle to start at the same time as or before any Annual Planning / Long-Term Planning process for councils.
• Map key processes to deliver capital programmes for councils (particularly around the use of spreadsheets and data transfer) and update standard procedures for quality control to ensure the organisation has the right checks and balances in place. We will also ensure there is clarity on accountability and ownership of key processes.
• Improving board oversight in all matters, including culture.
• Undertake a detailed forensic review of the updated calculations for the corporate cost to ensure that councils and their communities can have certainty in the numbers and that we can properly assess the impact of this error and provide that information to councils.
• Rebuilding trust with councils: identifying areas of tension and investing time to jointly work on those.

Other key, longer-term actions:

There are other key areas that will likely form part of an implementation plan and these will be confirmed once feedback is received from the Wellington Water Committee. They include, but are not limited to the following:

• Review of Wellington Water structure to ensure it has clear accountabilities and responsibilities and that it is relevant now and has the integrity to transition into a future operating model that will come with water reform.
• Systems and processes: improvements that would strengthen data integrity, enable systems integration, improve reporting, and establish clearer accountabilities within relevant roles. Our conversations with shareholding councils have stressed the need for additional funding for corporate infrastructure, such as fit-for-purpose systems – some core systems are at ‘end-of-life’ stage or no longer fit for purpose.
• Improving the resourcing of the Finance and Risk functions to fulfil its mandate and significantly strengthening these functions within the wider organisation.

Wellington Water apologises for error in budget advice, 24 May 2024

Release of review into Wellington Water's budgeting advice error, 26 July 2024

Wellington Water Committee Meeting Agenda, 24 May 2024 

Wellington Water Committee Meeting Agenda, 26 July 2024