Len Brown details Super City's 10 year budget

By Wayne Thompson, Bernard Orsman

Auckland mayor Len Brown's budget was predicted to be a bleak one. Photo / NZ Herald
Auckland mayor Len Brown's budget was predicted to be a bleak one. Photo / NZ Herald

2015-25 Proposed Budget Changes:

• Average yearly rates rise 2.5 to 3.5 percent

• City debt by 2025 drops $2.7 billion to $11 billion - Parks operating

• Spending drops $500 million; capital $800 million - Transport operating

• Spend drops $2.1 billion; capital $3 billion

• Total council operating spending drops $3 billion; capital by $2.7 billion


Auckland Mayor Len Brown today set out his priorities for spending over the next decade calling it a "people's budget" which will support development but cap average rates rises to 2.5 per cent and 3.5 per cent. Mr Brown said he was committed to 2.5 per cent rise over the first two years as sustainable with 3.5 per cent in the following eight years.

But this target meant about $2.7 billion less available for spending on capital assets compared with what was proposed in the 2012-22 budget now under review and which had rates rises capped at 4.9 per cent for the remaining seven years.

Investment in new assets was paid for by borrowing and he said the aim was to keep debt interest payments to 12 per cent of the council's annual revenue of $3.5 billion, which was a conservative loading. The council's debt now was $6 billion against $40 billion of assets.

The full council is now studying the mayoral proposal, which is subject to annual review anyway.

Mr Brown said present council cost-cutting had averaged $170 million a year in savings over the past four years so this year's pruning exercise was "just general business."

He pledged that a review of non-strategic assets would not include sale of the council's stake in the Ports of Auckland and in Auckland International Airport Ltd.

The parks, community and lifestyle budget for capital spending of $1.3 billion over 10 years was a cut of 39 per cent on present $2.1 billion levels. Operating costs would be cut by 9 per cent to $4.8 billion.

Read more:
Projects put on hold to soften council budget
Council's $53 million staff shift 'tacky'

However, facilities maintenance and cleaning would continue and there would not be closure of pools, recreation centres or libraries.

The budget debate will go on for a further nine months until decided including a three-month public consultation.

Mr Brown said a second part of the budget discussion would be about an enhanced transport plan. "Aucklanders keep telling me ... fix the transport."

However, extra money was needed and whether Aucklanders were prepared to pay for it through higher rates, or a new form of alternative funding would be subject to consultation later in the year.

Under present funding levels, the council could not afford do almost all of the park and ride projects currently programmed, as well as most of the local and arterial roading projects, the North-Western Busway and electrification of the railway line to Pukekohe and the Penlink short-cut route from Whangaparaoa Peninsula.

The capital programme for transport of $6.8 billion compared with $9.8 billion presently, included the City Rail Link, North Western Growth area projects, Warkworth SH1 intersection improvements, The East-West connections and the upgrades of Lincoln and Te Atatu Roads and Dominion Rd.

How much of the big transport projects was done over the next decade depended on further developing two options.

These were: significant rates increases, above those proposed and accompanied by higher fuel taxes, or the introduction of some form of new and alternative funding stream, such as a network charge.

Presently the council gets 43 per cent of its income from rates.


New scale

The proposed cuts are on a scale never witnessed in Auckland.

As well as trimming capital spending levels by $2.7 billion over the next 10 years to keep rates at 2.5 per cent the budget must cut spending costs, starting at $90 million in 2015-2016, rising to $630 million by 2024-2025.

With an average rates rise of 3.5 per cent, the reduction in running costs is $75 million in 2015-2016 and $430 million by 2024-2045.

Mr Brown made an election promise to hold rates to 2.5 per cent this term and reiterated this in January by saying he was determined that 2.5 per cent average rates rise is the "new ceiling".

Last month, Mr Brown signalled big budget cuts were in the pipeline to put rates and debt on an "affordable" and "sustainable" path.

An end to inorganic rubbish collections, reducing library hours, less mowing of parks and cutting cultural festivals and events were among the options for cuts floated on July 7.

The only sacrosanct project in the 10-year budget is the $2.4 billion city rail link, which Mr Brown has still to produce a funding plan for.

Last week, hundreds of capital projects totalling about $300 million were deferred by the council in this year's budget to address pressures in the 10-year budget.

These included core services, including $10.1 million less being spent on the city's dilapidated stormwater system and Auckland Transport targeting bus lanes and rail projects in Parnell and Pukekohe.

As well as big projects, $35 million of local projects are being deferred, including a skate park at Riverhead, $84,377 for a new playground and toilet upgrades in Mangere East, $5786 for litter bins and $1.9 million for a renewal of Mt Albert town centre.

- NZ Herald

Your views

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a3 at 18 Sep 2014 18:02:30 Processing Time: 354ms