Auckland Council's budget this year was an emergency budget. We confronted a $500 million loss of income because of Covid-19 and, on top of that, additional unbudgeted expenditure to bring forward $224 million of water treatment infrastructure projects to deal with a 1-in-200-year drought.
As a council, our first obligation is to manage Auckland's finances sensibly and prudently. When your income drops, so too must your spending. Hard decisions had to be made, cutting more than $200 million from our expenditure.
Staff losses will total more than 1000 employees, elected representatives and senior staff took pay cuts of up to 20 per cent, and nearly 60 per cent of other staff asked to do so have agreed to voluntary pay reductions. Non-essential spending has been slashed.
Council must become a leaner and more adaptable organisation, able to do more with less.
However, a top priority for us has been to maintain essential services — for example, our libraries, visited by more than 250,000 Aucklanders a week; our pools and community centres; maintaining parks, playgrounds and public facilities; protecting our environment and water quality; public transport; waste collection and recycling. Some of these services have had to be trimmed but we have protected service levels that are essential to Aucklanders' quality of life.
A further key priority is continuing to invest in the infrastructure necessary for getting around our city, building new homes and sustaining our environment. There is a big backlog in building the infrastructure our city needs because, in the past, investment did not keep up with growth. There is no better time to invest in long-term and valuable infrastructure assets than now, as we face a significant global recession. As we build these much-needed assets, we are also stimulating economic recovery and creating jobs when unemployment is growing.
This year we will invest more than $2.5 billion in building infrastructure—a little less than we had planned pre-Covid, but much more than the $1.6 billion average yearly investment in this area over the past five years.
Some people have asked—why not just borrow more? The reason is that borrowing well above the limit deemed prudential would lose us our high credit rating. That would add additional interest costs of hundreds of millions of dollars over a decade and create additional debt to meet today's operating costs — which would burden future generations.
I have also been asked why rates are increasing by 3.5 per cent this year. In the face of pressures on incomes caused by Covid-19, we looked seriously at reducing the rates rise.
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However, the cost of doing so would have meant more savage cuts to services and a big reduction in investment in infrastructure, which would have added to the costs of recession rather than offset them.
Further, after the budget went out for consultation, we achieved the right to draw more water from the Waikato River in response to low water-storage levels in our lakes, which has brought forward the need to spend nearly a quarter of a billion dollars more this financial year on water treatment infrastructure.
Nobody doubts that this money needs to be spent as a priority, to combat the risk of severe water restrictions next summer.
Instead of a cut to the planned rates rise, we have put $50 million aside to allow those in financial hardship to postpone their rates until they are back on their feet. For those not facing hardship, the difference between a 3.5 per cent and 2.5 per cent rates increase on the average property valued at around $1 million is approximately 47c a week extra on their rates bill.
Collectively however, it will allow $86 million more to be spent to protect the investments and services Auckland needs.
At the start of this year, none of us could have foreseen the way the global Covid-19 pandemic has changed our world. We can be proud of the fact that, by working together, our country has been one of the most successful nations in constraining the virus, saving thousands of lives.
Now, as we confront the economic costs of the pandemic and lockdown, we will also recover more strongly by working together. That was our motivation as councillors and local board members collaborated to find a balance in the emergency budget that best serves the interests of all Aucklanders.
• Phil Goff is mayor of Auckland.