Len Brown: 'We're not just racking up debt'

Auckland Mayor Len Brown. Photo / Sarah Ivey
Auckland Mayor Len Brown. Photo / Sarah Ivey

Auckland Council debt, which was $4 billion three years ago, has now reached $6.5b, but Mayor Len Brown says there is a good balance between the super city's debts and assets.

He told TVNZ's Q+A programme today that in the past three and a half years there had been a significant build in infrastructure.

"One of the primary reasons why Auckland was united was because we've had decades of under-investment in our infrastructure and particularly transportation, and so we've basically had to kick start.''

The city had $40b worth of assets to offset the $6.5b of debt, he said.

"So we're not just racking up debt.

"The only reason why we use borrowing is to actually build our asset, so it's not about paying our staff, it is about building the asset, so it's intergenerational debt,'' he said.

"Secondly the cost of our debt, interest costs for our debt, are about 10 per cent of what we pay out per annum. It's well within our borrowing criteria, and we've maintained our AA rating right through the last three and a half years.''

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Mr Brown was ``very confident'' about the state of Council's finances, ``and particularly about its borrowing levels''.

``It's about managing the balance between what you borrow and what you're investing in, and good management of your financial underlying factors.''

Mr Brown also floated the idea of an income or GST tax to replace rates and tolls or congestion charges to fund transport projects, including the $2.86b rail link for which there is still no funding package.

The current system was unfair to those on fixed incomes because while their income was not increasing the value of their properties were, which resulted in higher rates bills, Mr Brown said.

A spokesman for Finance Minister Bill English earlier said the Government was not considering the idea of an income or GST tax to replace rates.

Labour's finance spokesman, David Parker, also said his party had no plans to change the way councils were funded.

- APNZ

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