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Chatham Islands Enterprise
Trust
Strategic Plan
August 2009
Chatham Islands Enterprise Trust 2
Strategic Plan 2009
Contents
Page
Introduction 3
Trust vision 4
Trust values 5
Stakeholders 7
Strategic position 8
Introduction
This strategic plan presents the five year strategic intent of the Chatham The Deed describes the core areas of business interest, the way the Trust
Islands Enterprise Trust (“the Trust”) and its group of trading companies. will support the island community and industry sectors. The document also
The structure of this document is a strategic vision and program summary sets out the governance processes to be followed.
followed by a brief strategic program for each trading company. Detailed
company strategic plans and business plans are in the process of being The strategic plan is structured to have little commentary but list intended
developed strategic actions to be adopted by the Trustees. The planning process to
date has involved the following steps:
A standard strategic plan would consider an in depth analysis of the history 1. Attendance by Trustees, Directors and Staff at corporate
of the Trust, a Political, Economic, Social and Technology analysis governance training
(“PEST”). This strategic plan does not attempt to undertake a current 2. Initial drafting of planning document
positional analysis but refers readers to various expert reports that have 3. Strategic planning workshop (weekend in March 2009)
analysed the Island situation and also the position of the Trust on the 4. Companies develop strategic plans based on overall framework
Island: and develop 2010 business plans
• Taylor Baines Chatham Islands Economic Review dated October 2002
Next steps to finalise this strategic plan include:
• Taylor Baines Chatham Islands Economic Review (update) dated
1. Publication of document for Chatham Island resident comment
November 2008 2. Community workshop to receive feedback regarding strategic
proposals
The guiding document that governs the Trust is the Trust Deed. The Deed 3. Community feedback and company strategic plans considered by
is the founding constitution and single reference point for the organisation Trustees and the 2009 / 2010 plan finalised
and the trading companies that defines the organisation and why it exists. 4. Business plan finalised for 2009 / 2010 (to be reviewed quarterly at
Trust meetings) and actual performance assessed against business plan
Chatham Islands Enterprise Trust 4
Strategic Plan 2009
Trust Vision
Trust Values
Values are the set of guiding principles or set of belief characteristics that the organisation will use when interacting with customers, our stakeholders and
within the organisation. Values tend to be at the heart of an organisations culture that reflects how things are done and the way business is conducted.
The guiding values that underpin the way the Trust undertakes business, treats customers and stakeholders are captured as follows:
• Transparency (Where practical be transparent regarding Trust decisions subject to commercial confidentiality)
• Honesty (Undertake all affairs in an honest and open manner)
• Respect (Respect views of all stakeholders promoting an inclusive environment that values the capabilities and contributions of all)
• Integrity (Undertake all interactions with stakeholders with integrity)
• Loyalty ( Unswerving allegiance to the trust values and philosophy and the Chatham Island community)
• Leadership (A commitment to the success of the Trust for the benefit of the Chatham Islands).
• Extra Mile (to undertake the extra effort and dedication to ensure the success of the Trust and the Island)
• Responsibility (Take responsibility for community issues within the scope of the Trust Deed. We recognise that decisions the Trust make are
investments in a sustainable future)
As part of its accountability and performance assessment, it is the intention of the Trust to measure Trustee, director and staff performance in light of
these values.
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Strategic Plan 2009
Current Organisation Structure
The organisation and company structure features the Enterprise Trust acting as the overall governance body with six independent trading companies
operating the facilities.
The organisation’s structure is complex due to the Trust and trading company arrangement and hinges around a small team of people undertaking a range
of responsibilities and specialist tasks. Complexity arises due to the need to have separate identity for each trading operation to manage risk given that
each asset has different operating parameters. The Trust intends to retain but monitor the effectiveness of the current operating structure.
Stakeholders
Agencies Service
Providers
Chatham Islands Enterprise Trust 8
Strategic Plan 2009
Strategic Position
The Trust Deed sets out the objectives and roles of the Trust in the community.
This strategic plan is structured to address each of the objectives of the Trust.
The Trust has insufficient financial resources to deal with its current infrastructure obligations. Strategically the Trust will utilise available financial
resources to rebuild and develop its infrastructure assets for the benefit of current and future inhabitants of the island. Strategically the Trust wishes to
establish strong long term relationships with Central Government in order to secure funding and to solve current infrastructure issues.
The Trust will, as a key strategy, retain all quota it holds (granted and purchased over time) and exhaust all other avenues of funding and available financial
resources for use against infrastructure assets. To sell quota will undermine any economic or social future for the Chatham Islands.
Chatham Islands Enterprise Trust 9
Strategic Plan 2009
Objectives of the Trust Deed
Of particular note in the Trust objectives is the consistent use of the term for the “benefit of the present and future inhabitants of the Chatham Islands”.
This means decisions made must consider not only current residents but also the future residents such that there is no transfer of wealth for the benefit of
current residents at the expense of future islanders.
Items a – h of the Trust Deed are inextricably linked. For the purposes of the strategic plan three categories of assets / Trust objects are identified in
order to provide structure for planning purposes.
1 Economic development
2 Charitable Purposes
3 Infrastructure assets
The challenge for the governors of the Trust is to balance the commercial reality of maintaining high cost infrastructure facilities, against the social
demands that the Deed and the community require from the organisation for economic development.
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Strategic Plan 2009
Strategic Plan Summary
The following summarises the strategic direction of the Trust:
Given the declining financial resources held by the Trust and the increasing demands placed on resources by infrastructure assets the Trust wishes to
move its strategic focus from one of long term financial resource protection to addressing current infrastructure issues. The slow decline of the Trust
over time does not meet the Trust Deed adequately in protecting the future inhabitants of the Island. By planning ahead and dealing with issues pro-
actively the Trust strives to meet its obligations under the Deed. The core strategies for the next five years
are:
1 Orientate Trust strategic focus towards securing funding sources in a structured manner from central Government and agencies for infrastructure
development, and other economic and social development initiatives. This will be in conjunction with other Island organisations.
2 Whilst infrastructure assets are controlled by the Trust, the Trust will prioritise the future proofing of infrastructure services for the next 5 years over
other economic and social development initiatives. As identified by Taylor Baines (2008) the solving of current infrastructure issues on the Chatham
Islands will be a significant step towards improving economic and social development.
- Long term sustainable and stable electricity prices through natural renewable resources to reduce reliance on diesel generation and promote
island industry
- Effective and efficient port and airport services that future proof transport access to the island
3 Facilitate effective and cost efficient shipping or own a shipping service on behalf of the island.
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Strategic Plan 2009
Strengths, Weaknesses, Opportunities, Threats
The following is a summary of the analysis by Trustees of the state of the organisation as at April 2009.
Strengths Weaknesses
Loyal staff Deteriorating financial position
Self sufficiency – survival Poor maintenance of assets due lack of funds
No external debt Variable external relationships
Open to change No asset maintenance plans for infrastructure
Funding sources too narrow a spread – need other funding sources
Lack of on island human resource with technical capability to deliver objectives
No framework to balance equitably social demands versus long term economic future of CIET
Geographical isolation
Opportunities Threats
Enhance governance processes of Trust Rapid decline of funding base
Identifying new opportunities for revenue & funding sources Infrastructure assets collapse due to lack of funds
Partnering with other local key entities Departure of staff
Evolving Trustee team Slow to move - reactive to business / infrastructure needs
Improved decision making & implementation of decisions Reliance on key personnel
Environmental awareness Health & safety compliance
Better utilisation of funds
Chatham Islands Enterprise Trust 13
Strategic Plan 2009
Actions
It is recognised that some infrastructure assets may be operated on
breakeven basis (after depreciation and interest) whilst other trading
operations are able to generate a financial return on assets (market value or
cost).
The following are strategic actions to be investigated by the Trust. It is - Implement Return on Investment Criteria framework against
structured with brief comments followed by a list of action points. existing commercial investments and agree timetable for achieving
this return with Directors
A. Organisational
1 Consider existence of Trust and appropriateness of Trust
The Trust will endeavour to operate companies to achieve a commercial
structure for the Chatham Islands going forward return while balancing the social realities of the island community.
Actions The Trustees recognise that in some instances the rate of return on
• Work with Government to establish an economic base to fulfil the companies maybe lower of that expected in New Zealand. The Trustees
consider that the difference represents the “social balance” for the island
Trust’s long term social and economic objectives
reflecting the tougher economic environment experienced on the Chatham
Islands and any true commercial rate of return can not be obtained without
• Appoint representatives for the Trust and Chatham Island Council to undermining economic viability of current Island businesses.
consider appropriateness of combining all or part there-of of
infrastructure and commercial operations It is anticipated that on average the return across all investments and
companies will be sufficient to exceed annual inflation on the average.
- Commission report
3 Review Operational Management of Companies to reduce c It currently costs the Trust in excess of $600,000 per annum
compliance time and cost. (including special projects and consultancy) to run the Trust and all
its activities. Wages and salaries comprise $300,000 per annum.
Actions
• Assess existing structure but have common directors and meetings for d It becomes obvious that the annual cash surpluses from
infrastructure companies commercial operations are not covering the cost of running the
Trust. There is no return to provide for future replacement of
- Combine selected company meetings assets or to promote economic or social development without
eroding Trust capital. Quota is deemed to be a strategic asset and
- 1 Trustee as a director for each company (who is in not able to be sold. Therefore the only assets able to be realised
addition to one other local director) to facilitate better for cash to be utilised for infrastructure or economic development
communication between companies and Trustees initiatives is approximately $7,200,000. To do this will mean the
Trust will run out of funds to run day to day operations.
4 Priority of projects, resourcing and funding
a The Trust has limited resources within which to deliver the Actions
proposed strategic objectives – both financial and human resource The Trust needs to orientate its activities as follows
b Current realisable assets at market value are: • Establish a structured plan framework for pursuing Government
funding for economic and infrastructure development
Asset Description Estimated Average Cash
Market Annual Cash Return
Value Today Surplus (loss) % - Develop a funding strategy and research process
*
- Develop relationships with advisors and central - Facilitate effective and cost efficient shipping or own a
Government to assist in funding applications, reporting Shippings service on behalf of the island.
and accountability frameworks
5 Physical relocation of Trust Office versus current site
- Adopt greater responsibility for regional economic Actions
development • Trust office will remain in current site and the office maintained on as
needed basis.
- Housing –invest in on Island housing to promote
economic development and achieve on island commercial - Assess options for office site at a time when Chatham
6-7% Return. Island Council is evaluating its office circumstances.
participating in the “Warm Homes Project”. • Implementation of quarterly reporting against strategic and business Do trustees wish to include a focus
plan (beyond financial). on housing in this strategic plan ?
If appropriate develop a structured training plan for staff to assist in ability - Monthly emails of Trust updates and activities to all
to stakeholders (suppliers, Government officials, Chatham
Islanders).
- Gather information to acquire central Government funding
- Continue publication in Chatham Islander
- Report on economic development initiatives
• Hold bi-annual workshops with community to provide and receive
- Other initiatives as agreed to by the Trust feedback on strategic progress
• Develop a succession plan for the General Manager • Prepare website to make Trust information freely available
9 Transparency of operations
Actions
• Prepare policy on levels of disclosure in Chatham Islander
Chatham Islands Enterprise Trust 17
Strategic Plan 2009
- Develop a business plan proposal into partial or full ownership of a 11 Promote provision of services
shipping service – the Trust is prepared to invest in developing an • Provision of community wide broadband
effective shipping service to the island if required.
Communication with the rest of the world is increasingly important as
- Develop a business plan for stevedoring operations a business and marketing tool and improves quality of life for
residents. Satellite broadband provides a service to the community
• Investigate options to reduce reliance by the island on fuel. but is limited due to high costs.
Action
• Consider options around an on Island abattoir for processing meat. - Maintain a watching brief on Government broad band funding
This option will remain on hold until such time as the cost of initiatives and ability to secure funding for the Chatham Islands.
electricity is reduced in accordance with Electricity company’s mission
statement 12 Encourage and oversee transport services
• Refer also to Ports and Airport company plans
• Assist in the establishment of a Regional Tourism Organisation
functions for Chatham’s Tourism Industry. • Refer to shipping plans under Economic Development
13 Promote Fishing and the fishing industry • Support and promote enterprising developments
• Refer to Quota company
Actions
14 To promote farming and the farming industry • Continue current program and concentrate efforts on bigger challenges
There are a number of inter related issues and drivers facing the Trust and Island
• See Ports plan and plans for Port redevelopment / breakwater concept
Actions
• Assist with projects such as sustainable farming on a reactive and
supportive basis.
Trading Company Business Plans
Each trading company has its own dedicated Board of Directors that • Develop a facility improvement plan allowing for future runway
underpins the self governance philosophy the Trust promotes through its extensions if required.
trading companies.
• Consider ownership structure.
Chatham Island Airport Ltd
The airport facility is Chatham and Pitt Islands’ gateway to the world. It is • Consider options of Government involvement or ownership in airport.
important to have a facility that creates a favorable first impression given
the majority of visitors and travelers pass through the terminal. The facility • Seek independent Director appointment with airport experience.
has a functional requirement to serve as a receiving station for fishers and
freight depot for inbound freight arriving by plane. • Long term focus is to upgrade presentation of facility to make more
presentable to visitors. Currently such plans are low priority.
Mission
Have an Airport facility that is sustainable, meets the needs of all
Chatham Islanders and facility users, and is operationally safe at • Implement target for company as break even and focus on provision of
reasonable cost to all stakeholders. service.
Actions
• Continued compliance with Civil Aviation Authority sections 171 and
139.
Chatham Island Electricity Ltd - Only essential maintenance will be undertaken while the Trust is
facing declining funds
- Assess all proposed projects and capital expenditure against ROI
criteria and the mission statement
• Continue ongoing improvements in day to day activities to achieve
best practice.
Chatham Island Ports Limited • Establish a relationship with a consulting firm to assist Trust initiatives
such as project development, project maintenance and peer review.
Actions
• Continue ongoing improvements in day to day activities to achieve
best practice.
Chatham Island Forestry Limited • Consider sale of all surplus land as is – if someone wishes to acquire
The Forest Company has two areas of interest. The first being property at • On the Chatham Islands no further expansion of forestry is planned:
Mahia close to Gisborne and the second being forest development on
Chatham’s. Both of these business interests historically have been
considered long term investments for the Trust. - The existing forest will be maintained, pruned and thinned until
maturity
The Mahia block has approximately 15 years until it achieves logging
maturity. - Exit from non performing forestry investments
At the Mahia forest all the pruning and thinning has been completed and
now the trees are in the maturing phase. This means forest maintenance
and management costs will decrease until the trees are mature enough to
harvest.
Mission
To meet a 5% per annum cumulative return on investment.
Actions
• . Current thinking is that the Mahia forest may not be held to maturity.
It is contemplated either of the following options will be investigated
within the next 2 – 3 years
Chatham Island Quota Limited - Open to initiatives if approached but not a priority for
Trust until infrastructure issues solved
This is the largest commercial asset of the Trust with a market value of
approximately $16.5 million comprising CRA6 and wet fish quota. Quota
• Allocated quota from government cannot be used as security for
is considered a core asset of the Trust and the retention of the current level
of quota is considered fundamental for the future economic and social purchasing further quota.
survival of the island.
Mission
To hold, Chatham’s area quota shares and sell the ACE to
Chatham’s based fishers at a fair and reasonable price whilst
achieving an acceptable market rate of return for the company.
Actions
• Obtain a commercial rate of return on market values of assets.
Mission
To provide timely, efficient, management, accounting and
administration services to the Trust and its companies. To act as the
economic development agency for the Island. To hold commercial
assets and operations until they reach a point where a separate
company is required to manage the assets effectively.
Actions
• Facilitate the many projects / actions detailed in this plan