Part 4: Monitoring and reporting

4.1
In this Part, we discuss:

• our expectations about monitoring and reporting;
• monitoring and reporting the Corporations’ performance in acquiring houses;
• using internal monitoring and reporting information;
• monitoring the management and renewal of leases; and
• the opportunities and risks in initiatives for improvement.

Our expectations

4.2
It is important that the Corporation’s performance against state housing targets is monitored and reported to management so that emerging issues can be addressed. We expected the Corporation to:

• have systems in place to ensure that its monitoring and reporting of state housing targets was complete and reliable;
• use its monitoring and reporting information to support the effective use and delivery of state houses; and
• monitor the renewal of lease agreements.

Monitoring and reporting of acquisition performance

4.3
Staff involved in buying and leasing are responsible for updating progress information to a monitoring system managed by the Acquisition and Development Team. The system tracks performance against regional and national targets. Potential state houses are listed in the report and their status is updated as each step of the buying, leasing, or building process is completed.

4.4
In our view, monitoring is supported by good levels of formal and informal interaction between business groups at regional and national levels. Managers responsible for buying and leasing properties are in contact with their staff based in regional offices. We were told that they also communicate regularly with other regional staff so that they have a complete picture of performance.

4.5
The Corporation reports at a strategic level on its performance against the Statement of Intent and Corporate Business Plan, and at a regional level against Regional Action Plans. Information about the number of state houses acquired is included at each level of reporting.

4.6
At the strategic level, the Acquisition and Development Team’s monitoring of housing targets is consolidated into a monthly report from Asset Services to the Board. The monthly report measures performance against the targets in the Corporation’s Statement of Intent and identifies potential risks. Corporation staff check the accuracy of information reported to the Board, and in the Corporation’s quarterly reports and annual report, by validating the monitoring information against data held on the Corporation’s property database.

4.7
A cross-divisional reporting team measures performance against targets in the Regional Action Plan and reports to regional management staff. The Corporation’s executive team reviews a 2-page summary of each regional report. The Corporation is introducing a formal risk reporting framework for its regions in 2006-07.

4.8
In our view, the Corporation is thoroughly monitoring its performance against state housing targets, and has systems in place to ensure that performance reporting is reliable.

Using internal monitoring and reporting information

4.9
Information about the Corporation’s performance against targets is available to staff through customised reporting software. The software allows users to examine the detailed regional office, neighbourhood office, or individual property information that supports monthly reporting information.

4.10
With wide access to good quality information, the Corporation is able to make better use of state houses and can respond to trends in its housing programmes, as illustrated in the following examples.

Using monitoring information for an efficient use of state houses

4.11
The Corporation identifies state houses that are “under-used”. Under-used houses are larger homes in which few people live, such as a family home where several children have grown up and left home. The Corporation monitors and reports instances of under-used houses as a percentage of all state houses.

4.12
The Corporation uses some leased properties that have been newly built to tempt tenants out of houses that no longer suit their needs.¹ The 2004-05 Annual Report notes that the equivalent of 142 3-bedroom houses were made available to other applicants on the waiting list by transferring existing tenants to more suitable houses.

Using monitoring information to reallocate housing targets

4.13
The Corporation’s performance information enables it to recognise trends and alter its various programmes accordingly. The Asset Services Group meets each quarter to review acquisition performance. One outcome of these meetings is that state housing targets and budgets may be reallocated to different regions.

4.14
One such reallocation exercise occurred in December 2005. Because of a challenging property market, a shortage of housing supply, and increasing prices, the Corporation considered that it was not likely to acquire all the houses that it had planned to acquire in Auckland during 2005-06. Instead, the targets to acquire 68 properties in Central Auckland and 26 for South Auckland were reallocated, mainly to the Waikato/Coromandel/King Country and Christchurch/Nelson/Marlborough regions. The reallocation of these housing targets was supported by a detailed paper to the Property Committee of the Housing New Zealand Corporation Board, prepared by managers within Asset Services and approved by the Chief Executive.

4.15
The reallocations are an example of the Corporation using its available resources to meet housing needs throughout the country. For reallocations to be effective, management staff in the region receiving the reallocation need to be involved in the decision-making process. While staff responsible for acquiring the properties were consulted, we observed one instance in which the communication about the reallocation was not clear to those with responsibility for allocating houses to tenants.

4.16
In our view, overall, the Corporation uses its monitoring and reporting information to support the effective use of state houses.

Opportunities for the Corporation to improve external reporting

4.17
As we noted in Part 1 of this report, a large proportion of the funding used to acquire properties for state housing is directed at addressing the need in Auckland. In Part 2, we noted the increasing sophistication of the Corporation’s planning process, particularly in its focus on regional needs. These developments provide an opportunity for the Corporation to enhance its accountability reporting on its performance in addressing housing need in Auckland and in other regions.

Monitoring the management and renewal of leases

4.18
The Corporation monitors the number of leases that are successfully renewed. Until the appointment of the national Lease Programme Manager, there had been no national co-ordination of the risks associated with the renewal of leases, resulting in some local responses to managing and renewing leases.

4.19
The Corporation plans to renew 86 leases in 2005-06. Its Asset Management Strategy indicates that this will increase to 219 by 2008-09. It is reasonable to expect this increase to continue as more state houses are leased, and as the existing 5-year and 10-year lease terms begin to expire.

4.20
Currently, the Corporation’s property database gives staff 120 days’ notice before a lease expires. Regional management considers lease expiry and renewal monthly. The Corporation will exercise any rights of renewal, or enter into new negotiations with owners, if properties are deemed suitable.

4.21
If the Corporation decides not to seek renewal of the lease, tenants are to be given 90 days’ notice of relocation and a choice of 3 other suitable properties to move into. The Corporation fixes any damage to the leased property after the tenant has relocated.

4.22
The 3 Regional Asset Management Plans for Auckland all note the increased pressure on staff involved in managing and renewing leases. This risk is currently not included in the Corporation’s ORCA document (see paragraph 2.27), but the Corporation has included managing this risk in the national Leasing Programme Manager’s job description.

4.23
In the meantime, regional offices have initiated their own strategies for dealing with the day-to-day management of leases. For example, one region made lease management a responsibility of its entire staff , to build familiarity with the process and institutional knowledge. Another allocated all leases to one designated staff member, for efficiency and a single point of contact for owners.

4.24
We also noted that one of the Corporation’s regions has, in the past, formally planned for and assigned resources to a project to ensure that the renewal of leases proceeded smoothly. We consider that there should be national recognition and co-ordination of the risks associated with the renewal of leases. The project-based approach is a sensible starting point.

Opportunities and risks in initiatives for improvement

4.25
Throughout this report we have referred to initiatives that represent opportunities to improve the Corporation’s planning and its programmes. The initiatives are at various stages of planning and implementation. Some relate to the Corporation as a whole, and others are specific to individual business groups. The initiatives include: updating information each year about long-term housing needs (see paragraph 2.12); studying the changing needs of applicants on the waiting list and existing tenants (see paragraph 2.14); enhancing the regional business planning process (see paragraph 2.18); planning for state houses at “precinct level” (see paragraph 2.24); improving the leasing programme (see paragraph 2.37); and introducing formal regional risk reporting in 2006-07 (see paragraph 4.7).

4.26
Many of these initiatives involve the same staff from throughout the organisation. There is a risk that the Corporation will be unable to realise the full benefit of these initiatives because staff may be unavailable, either because they are involved in other initiatives or because of the pressures of day-to-day business.

4.27
To address this risk, the Corporation is establishing a Programme Management Office project within the Asset Services business group to co-ordinate these new initiatives. The project is intended to provide an example for the rest of the Corporation to follow. We support the initiative, and consider it necessary for ensuring that the benefits of these projects are realised, and that business as usual is maintained.

1: The Corporation has a policy of providing security of tenure for tenants and does not transfer tenants without their agreement.