Auckland Council's budget hole blows out to $750 million

Taking more water from the Waikato River adds to the budget hole. Photo / Christine Cornege

Ratepayers could be in for a shock as the hole in Auckland Council's "emergency budget" has blown out to $750 million because of the drought crisis.

"Our budget has just gone from an emergency to a critical situation," finance committee chairwoman Desley Simpson told the Herald today.

Simpson said the $224m cost to boost the city's water supply was on the top of the $525m hole in the budget from the impact of Covid-19, which prompted savage cuts to transport and the loss of community services.

The gaping hole comes just nine days before councillors have to make tough calls on the final budget and strike a 3.5 per cent or 2.5 per cent rates increase.

Councillors learned today that 64 per cent of submitters to the budget want a rates rise of 2.5 per cent or less. One-in-four submitters want a rates freeze and 9 per cent a rates cut, many citing financial hardship and the impact of Covid.

Just 28 per cent backed the option for a 3.5 per cent rise, expressing the view it makes sense to invest in infrastructure and keep council services running.

The feedback places councillors in the difficult position of being mindful of the concerns of ratepayers and plugging a bigger budget hole that did not exist when Aucklanders were giving feedback.

"Councillors now have less than two weeks to frame a decision that responds to this critical situation in a way so Aucklanders are not severely compromised in council services," Simpson said.

Auckland councillor and finance committee chairwoman Desley Simpson. Photo / Jason Oxenham

Watercare sprung the $224m cost of bringing back old water supplies, upgrading others and taking more water from the Waikato River at a confidential council workshop last Thursday.

The cost is $44m higher than the top estimate of $50m to $180m flagged in the 'emergency budget' but not provided for.

It is understood Watercare was given until last night to come with solutions to cover the $224m cost, but has not done so.

Mayor Phil Goff said options for Watercare included increasing water charges, selling surplus assets and deferring non-essential projects.

Goff said the record number of 34,915 submissions to the budget show how seriously Aucklanders are taking matters.

"The Covid-19 crisis means that this is not a business as usual budget for Aucklanders or for the council," he said.

Auckland Mayor Phil Goff. Photo / Supplied

Goff said the 28 per cent support for a 3.5 per cent rates rise and 29 per cent support for a 2.5 per cent rise shows Aucklanders' support for raising rates to provide essential services.

Separate to the public feedback, the council commissioned a Colmar Brunton survey which found 51 per cent support for a 2.5 per cent rates rise and 38 per cent support for a 3.5 per cent rise.

The draft emergency budget and the Colmar Brunton survey only included options for a 3.5 per cent or 2.5 per cent rates increase, but this did not stop a lot of people expressing a preference for lower rates.

In the draft budget material, Goff said the council was not proposing rate increases below 2.5 per cent because of the severe impacts that would have on council services, new infrastructure, debt levels and employment and business activity in Auckland.

Aucklanders' feedback on the budget

General rates increase

• 3.5 per cent - 28 per cent

• 2.5 per cent - 29 per cent

• Less than 2.5 per cent - 1 per cent

• 0 per cent - 25 per cent

• Rates cut - 9 per cent

• Don't know - 8 per cent

Boards who strongly supported 3.5 per cent

Albert-Eden, Kaipatiki, Puketapapa, Waitakere Ranges, Waitemata

Boards who strongly supported 2.5 per cent

Henderson-Massey, Howick, Mangere-Otahuhu, Papakura, Upper Harbour, Hibiscus and Bays, Franklin

Boards with the strongest support for freezing rates

Hibiscus and Bays, Howick, Rodney

Colmar Brunton Survey*

• 3.5 per cent - 38 per cent

• 2.5 per cent - 51 per cent

Some key findings

• Men were more keen than women on a 2.5 per rates increase.

• Non-ratepayers were more comfortable with 3.5 per cent.

• Asian people had a strong preference for 2.5 per cent.

* The survey of 4054 Aucklanders was carried out between June 5 to June 25