Finance & Corporate Committee - Zoom Meeting

Summary of main arguments and updates

1) Finance & governance items

• The committee opened with apologies and confirmed the meeting order and agenda.
• The minutes from 18 February were approved as a true and correct record, with a noted correction: one attendee’s name was missing, and would be amended.

2) Tourism sector update (Waikato District focus) — COVID impact and recovery planning

• A tourism sector representative (Jason/Sam presenting) reported that tourism had been growing rapidly pre-COVID, including double-digit growth in visitor spending and accommodation.
• The COVID shock drastically changed conditions.

Key drivers of decline

• International arrivals dropped sharply due to lockdown and travel restrictions.
• The region was already hit by loss of China group travel in late January:
  • China was the 4th-largest international market, after Australia, North America, and UK/Europe.

Impacts across Waikato

• Accommodation, hospitality, retail, and related services experienced major reductions.
• Many businesses moved into temporary seasonal closure (“hibernation”), while others faced permanent closure risks.
• Job losses and business closures were highlighted, with concern that recovery support needs to extend beyond the 12-week wage subsidy period.

Airline connectivity and travel outlook

• The presenter emphasised ongoing baseline airline connectivity (for repatriation and cargo).
• However, restoring pre-COVID international travel levels could take years.
• Restart plans were described as incremental, starting domestically and eventually broadening further.

Events and trading signals

• Major events were mostly postponed rather than cancelled; some still scheduled, but international participation depends on travel restrictions.
• Fieldays planned as an online virtual event starting 30 June for two weeks, with hope of a return in 2021.

Strategy framing: a “three-tier” tourism response

• Mitigate (current)
  • Advocacy and operator support
  • Check-ins for 240 listed operators
  • Webinars and workforce redeployment
• Restart
  • Planning for a domestic return (including research into domestic perceptions)
  • Business events restart campaign
  • “Shovel-ready” projects via Crown infrastructure processes
• Reimagine (long-term)
  • Alignment with a government call to reshape tourism towards more sustainable, community-led “net benefit”
  • Moving away from “boom and bust”

Workforce redeployment examples

• Staff redeployed from tourism employers (including those linked to major attractions) into:
  • Kiwifruit and avocado
  • Supermarkets
  • Civil defence and security
  • Food bank support

Domestic travel recovery timeline

A staged recovery was outlined as roughly:

• 1–3 months: hyperlocal
• 3–6 months: intraregional (drive market)
• 6–12 months: domestic market
• 1–2 years: international impact likely returns gradually (Australia/Pacific first)

3) Discussion and questions from committee members

Members asked about:

• Funding partner for regional major events (Well Energy).
• Stakeholder inclusion in “reimagining” tourism, notably Department of Conservation (confirmed as part of joint work).
• Potential impacts on international-dependent parts of Waipa:
  • The presenter noted sports codes/events as a key international sensitivity.
  • Waipa operators were generally more domestically oriented.
• Confidence in a pathway back through domestic travel, including:
  • Self-drive and caravan/motorhome markets
  • Regional event platforms

4) Hamilton Airport (RWA) — COVID financial/operational response and outlook

RWA’s executive team presented a COVID response shaped by the airport group’s multi-business exposure.

Operational and financial impacts

• Aeronautical income collapsed with flight suspensions, including a major loss from the flight school.
• Terminal closure shifted operations primarily to emergency medical service use.
• Tenancy/property impacts occurred (mitigated by early tenant support).
• Hotel impacts:
  • Used as a Ministry of Health isolation facility during April
  • Government payments ended shortly afterward

Measures taken

• Early development of a pandemic plan and scenario modelling approved before lockdown.
• Cost reductions, including payroll and director fee reductions.
• Use of the government wage subsidy.
• Ongoing work with hotel/operator (Jetpark) regarding restructuring and future stages.

Financial resilience narrative

• Conservative recovery assumptions in modelling, including:
  • No meaningful Air New Zealand activity before October
  • Gradual passenger recovery
• Diversification strategy (e.g., property/land sales) positioned as a key buffer.
• A major conditional land sale provided margin and free cash flow to carry the group through the year and into the following period.
• RWA stated there was no immediate need for shareholder support, and described covenant/funding as manageable in their scenario.

Capital works and funding

• Pursued Crown Infrastructure “shovel-ready” projects for terminal redevelopment and other airport infrastructure.
• Terminal redevelopment described as ready to commence enabling works quickly, if funding mechanisms allow.

Flight school question

• It was suggested flight training might resume under level-based restrictions (with social distancing challenges), but timing remained uncertain.

5) LASS (regional shared services / transformation) — role, transformation approach, and COVID relevance

A new chair/co-lead (Peter/Kelvin referenced) outlined LASS’s transformation agenda:

• Enable councils to work regionally on shared projects to reduce ratepayer burdens and improve effectiveness.
• Deliver “transformative projects at pace” with stronger tracking, communications, and council buy-in.
• Emphasis that LASS’s role becomes more relevant in post-COVID recovery, supporting:
  • Resilience and “security of public works”
  • “Doing more with less”
  • Staff development

Q&A themes

• Resourcing risk:
  • Assurance that LASS sought early redeployment/support from councils.
  • Engagement with council CEOs to identify staff skillsets to keep LASS projects moving.
• Energy/carbon management:
  • Clarification that “energy and carbon management” was not the specific election-era carbon audit referenced.
  • Related expertise could still potentially support such work.

6) LGFA (Local Government Funding Agency) — financing access, interest rates, and “green” direction

The presentation covered:

• LGFA’s purpose: long-term financing for councils, interest savings, and access to debt markets.
• Profit forecast: on track despite outdated SOI forecasting due to COVID.
• Low interest rate environment:
  • Short-term borrowing possibly below 1%
  • Recent longer-term issuance at about 1.46% (implying ~1.7% for Waikato after pricing)

Market support and investor confidence

• LGFA issued successfully during lockdown when investor risk aversion was high.
• Confidence supports included:
  • Government standby facility rollover
  • Reserve Bank bond buying eligibility

Council-facing challenges

• Councils may face covenant pressures in 2021 if revenues fall significantly.
• Reduced capacity for capex cutbacks may conflict with government economic stimulus goals.

Green financing question

• LGFA intends to offer green financing frameworks (and possibly social/sustainable categories).
• Councils must identify qualifying green projects, and certification processes will apply.

7) Financial report (Nada / council reporting)

For end-of-March standing:

• Income and operating expenditure as % of forecast:
  • Income ~74%
  • Operating expenditure ~72%
• Capital expenditure and asset/receipts indicators were reviewed.
• Health warning:
  • COVID makes the forecast column outdated.
  • A reforecast is being prepared for the next report.
• A recommendation was passed to accept the report.

8) Health & safety report (Steve/Bev and staff representatives)

Health and safety matters reviewed:

• Two reported trips at Cambridge entranceways were investigated; no significant cause found (likely isolated).
• How health and safety resources are tracked:
  • Lead indicators covering spend on external health monitoring, EAP services, and training.
• Confidence in frontline knowledge:
  • Health and safety reps and training described as active and disseminating information.
• COVID mental/health influences:
  • The reporting period didn’t include full COVID impacts (covered only up to Nov–Feb).
  • Next report to include COVID effects.
  • Staff well-being monitoring register and level-3 workplace protocols were in development.

A recommendation was passed to accept the health & safety report.

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Presenters / contributors (named in subtitles)

• Jim (apologies reference)
• Andrew (mover/participant)
• Lou (participant)
• Susan (participant)
• Ken (chair/committee reference)
• Hazel (apologies reference)
• Graham
• Bruce
• Marcus
• Sam
• Jason (tourism presenter)
• Ian (asked thanks/participant)
• Mark Morgan (CE, Hamilton Airport presenter)
• Scott Kendall (finance manager, Hamilton Airport)
• Kelvin (LASS presenter, co-lead referenced)
• Peter (LASS presenter / chair referenced)
• Andrew (LGFA presenter, referenced as speaker)
• Nada (financial report presenter)
• Steve Shaw (health & safety)
• Bev (health & safety)
• Terry (health and well-being monitoring referenced; appears as part of the team)