After nearly two days of rigorous debate, Auckland councillors have agreed on a budget that includes selling a partial shareholding in Auckland Airport.
This afternoon, councillors and Mayor Wayne Brown voted 14 votes to 6 with one abstention to approve all of the mayor’s first budget, which kicked off last year with savage cuts to community services, the arts and across the council group.
The council initially proposed to sell its full 18.1 per cent stake in the airport. It instead will reduce its shareholding to 11.1 per cent.
The new deal will see the council potentially get a windfall of $865 million, which is intended to help pay down debt.
The Vote
For: Wayne Brown, Desley Simpson, Andy Baker, Chris Darby, Christine Fletcher, Shane Henderson, Richard Hills, Daniel Newman, Greg Sayers, Sharon Stewart, Ken Turner, Wayne Walker*, John Watson*, Maurice Williamson.
Against: Josephine Bartley, Angela Dalton, Alf Filipaina, Lotu Fuli, Mike Lee, Kerrin Leoni.
Abstained: Julie Fairey.
* Councillors John Watson and Wayne Walker voted for most of the budget but recorded their votes against the decision to sell the airport shares.
Brown said the budget had been passed with more relief than joy.
“We have to pass the budget and it has to balance, but this will have to be paid and more debt will require a harder adjustment,” Brown said.
In a statement, Brown called the deal the “most prudent, balanced budget for Aucklanders”.
“This budget represents a large reduction in the council’s debt, protects core services and keeps rates under control. It is the start of the work to fix the council’s budget and secure our financial sustainability.
“After 29 workshops and over 90 hours of formal discussion, we have reached a decision on the most challenging and contentious Annual Budget in the history of Auckland Council.”
Elected members also voted to keep residential rates at a 7.7 per cent increase for the average household.
Following the vote, emotions were high with Labour councillor Alf Filipaina verbally abusing fellow party member and Waitakere councillor Shane Henderson for voting to sell airport shares and not sticking to the party line. Henderson was seen with his head in his hands at his chair and being consoled by deputy mayor Desley Simpson.
Shortly before the vote, Henderson said the budget had been “tough, incredibly tough”.
Councillor Kerrin Leoni said the city has been dragged around and under stress for months and was happy to have gotten to this point.
The meeting was interrupted late this afternoon by two members of Auckland Action Against Poverty, Brooke Pao Stanley and Agnes Magele.
The pair hectored councillors about selling the airport shares, the need to borrow money to plug the budget hole and inviting councillors to come and see living conditions on the ground.
Brown adjourned the meeting for the women to be removed, but following a request from governance director Phil Wilson for them to leave, they left on their own accord.
Councillor Mike Lee said it was a disappointing day, especially with the loss of councillor Lotu Fuli’s amendment to retain the airport shares.
”This is the first step to a complete sell-out and the sale of Ports of Auckland. “Selling income-earning assets is a failed strategy and race to the bottom,” Lee said.
Earlier, Auckland councillors voted down two alternative budget plans in a second day of debate over
The amendment by councillor Angela Dalton was lost by 8 votes to 13, the same result as the previous amendment from councillor Lotu Fuli.
Dalton proposed to adjust rates to 7.7 per cent, reducing cuts to $69.8 million, reducing debt to $120 million and restoring all local board funding.
Fuli’s plan was to retain the council’s airport shares and borrow a further $60 million in debt to plug the loss of income from holding the 18 per cent shareholding.
Despite getting the support of most left-leaning councillors, three councillors on the left - Shane Henderson, Richard Hills and Julie Fairey - did not back the plan.
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Mayor Wayne Brown’s compromise to break the stalemate over Auckland Council’s budget by selling only part of its shares in the airport was earlier slammed as a “cop out” as tempers rise around the debating table.
Disagreement over debt, rates rises and the financial management of council has dominated discussion as the budget debate entered its 10th hour and second day.
“How is it we’ve been able to be so financially imprudent for so long?,” a visibly-frustrated Councillor Wayne Walker asked.
He said council’s expenditure relative to its income is “out of control”.
Councillor Greg Sayers said taking on more debt has been the approach under Mayors Len Brown and Phil Goff and claimed Aucklanders “are sick of it”.
This morning’s session opened with Fuli saying council needed to keep the airport shares on behalf of Aucklanders.
That was backed up by Councillor John Watson, who called Brown’s proposal to sell only part of the shares a “cop out.” Brown’s new proposal is to sell 8.09 per cent of the 18.09 per cent holding, which he said would achieve savings of $28 million next year, instead of $60m from selling all the shares.
Watson called that suggestion a “back door” that will inevitably lead to a full sale of all shares in the future at a time when investors were “lining up to by the stock”.
Just before the meeting adjourned at 5pm yesterday without any decisions on Brown’s latest proposal, Fuli tabled an alternative proposal, seconded by her Manukau colleague Alf Filipaina, to consider selling the shares as part of next year’s 10-year budget, holding household rates to 6.8 per cent and increasing debt from the $100m in Brown’s proposal to $160m.
It is understood Fuli’s amendment has been worked up by 10 councillors opposed to the sale of the airport shares, valued at $2.2 billion.
If Fuli’s amendment passes today with 11 or more votes, it will seal the budget and Brown’s proposal will not proceed.
“I’m proposing we will fill the gap with a general rates increase of 7.7 per cent for the average residential property,” said Brown - 1 per cent higher than his previous figure of 6.7 per cent to hold the household increase at the rate of inflation,” Brown said after tabling his latest proposal yesterday.
The new overall rate rise is 11 per cent, with businesses paying more than households.
He has also proposed cutting local boards’ discretionary funds by $4m and requiring council chief executive Jim Stabback to find another $5m in cuts.
Earlier in the day, council group chief finance officer Peter Gudsell said increasing debt is a short-term answer that could make the remainder of the year or next year harder and was not a prudent approach.
Gudsell said debt “reduces headroom to deal with future shocks”.
He called it “not a credible or prudent approach to financial management” and said it would only defer decisions on how to close the budget gap.
In an unusual move, Brown gauged the mood of the room before lunch by giving each councillor five minutes to say what kind of budget they would like, adjourning the meeting for an “open workshop” for councillors to speak freely without jeopardising their speaking rights during the formal business of the budget meeting.
Both sides of the airport debate gave impassioned speeches, with Mike Lee calling the sale the biggest asset sale in Auckland’s history and Maurice Williamson saying even the good times are bad for holding the shares.
Williamson said more costs are coming down the pipeline for the council, warning that he had been told the final cost of the City Rail Link will be $7.5b instead of $5.5b.
“We do not need to own an asset that is not washing your face,” Williamson said.
Councillor Kerrin Leoni said the airport shares should only be sold as a last resort, and she would be happy to consider a small increase in council debt.
Several councillors said a lot of the issues - the sale of the shares, spending cuts, revenue and debt - would be better dealt with in the 10-year budget, which comes next year.
Deputy Mayor Desley Simpson said Aucklanders deserve a budget that doesn’t hurt too much, and that’s for both residential and business ratepayers.
She said inflation and Reserve Bank rate rises had heaped extra costs on the council.
While the council had expected these as potential costs, devastating weather in summer had made the situation much more difficult, she said.
Simpson said councillors should be careful in raising rates too much because of the cost-of-living expenses people are facing for things like transport and food costs and paying mortgages.
Councillor Richard Hills said he didn’t like any of the budget levers - spending cuts, raising debt, higher rates or selling the airport shares.
“The focus for me was reducing the level of those cuts to our community, reducing the staff cuts, reducing what I feel is mean cuts to what is going on in the city, the environment ... I could keep going on,” he said.
The North Shore councillor said public feedback on the budget was the biggest on record, with more than 70 per cent of people saying they weren’t happy with the scale of the cuts.
Last month, Brown reduced suggested deep cuts to arts and social services, including the Citizens Advice Bureau, following public feedback.
In a late twist just hours before yesterday’s meeting, Albany councillor Wayne Walker declared he is the beneficiary of a $3m shareholding in Auckland Airport held in the estate of his late father.
Walker and two other councillors with family links to airport shares, Julie Fairey and Chris Darby, were cleared by council staff and the Office of the Auditor-General to vote on the share issue.
Brown closed the meeting by saying it “is a very hard budget and I want to ensure that we take our time to work through the process properly”.
“I have always said it may take a couple of days of constructive debate. There is no issue with that, we are simply adjourning to another day,” he said.
The man then went on to kick a police officer while being walked to a patrol car.