Auckland Mayor Wayne Brown’s final budget plan offers airport shares tradeoff

Auckland Mayor Wayne Brown has today put up a number of sweeteners in his final budget proposal to get his plan to privatise the council’s $2.2 billion shareholding in Auckland Airport across the line.

Brown is offering to reinstate funding for social services and the arts, as well as a $16m budget cut for Local Boards; and increase the pay of bus drivers to $30 an hour to restore suspended services.

But if councillors want the lollies on offer, Brown said they will have to offload the council’s 18 per cent shareholding in the airport.

Auckland Mayor Wayne Brown presents his budget proposal at Auckland Transport headquarters. Photo / Michael Craig

Announcing the budget proposal this morning at Auckland Transport headquarters, Brown said it was a tough budget.

“Everyone wants to go to heaven but no one wants to die,” Brown quoted, referring to the difficult choices that needed to be made.

People “went mad” about proposed cuts to art and culture, and “we heard that”, Brown said at the rambling press conference, which was delayed after some media were refused entry.

But it did make people realise that arts and culture facilities did need to be paid for.

Brown pointed out that debt is a lever for paying bills. But he called it a “soft” option and living outside of one’s means.

There were people around Auckland who had taken on too much debt and were “bitterly” regretting it.

Pointing to the Auckland Airport shares, he said council’s ownership is entirely funded by debt. It meant council paid $100m in interest repayments and got a small return back, around $20m to $30m, Brown said.

Brown proposes to sell the $2.3b worth of Airport Shares as a key way to try and keep rate rises within 6.7 per cent or close to inflationary rises.

He expected that AT will move from its HQ to council head office. “Personally I would have them in Nissen huts.”

Brown said he has listened to people’s calls and has softened some of his spending cuts.

He said arts and culture leaders are present in the room and they had spoken well for their fields.

Arts and culture groups and local boards will “get their money back”, with their funding levels to be restored, Brown said.

Citizens Advice Bureau funding is to be restored but they will have to start looking for other income.

The softening of the cuts was “contingent on the sale of airport shares”.

To prevent the sale of the shares being a one-off cash injection into council that would be offset by future borrowings, Brown said he will set a lower debt-borrowing limit for council.

He said selling the shares is not “selling the family silver”.

It didn’t give council influence or control over the operation of the airport. That made the shares “technically a poor performing investment”.

Brown said we will finish the City Rail Link “one way or another”.

In pitching his mission to “Stop wasting money”, Brown took aim at Auckland Transport.

Auckland mayor Wayne Brown outlines his budget at AT HQ today. Photo / Michael Craig

He said AT spent $76,000 on walking tours and only 52 people took the tours.

Brown complained that Heart of the City was not doing enough. Chief executive Viv Beck said “I’d like a right of reply” and Brown said “you had your right of reply and no one believed you”.

Brown ended his press conference by saying: “To the last to leave, turn the lights off.” He did not allow questions.

Earlier this week, Brown told the Herald that If the shares are not sold, he would reinstate spending cuts ahead of putting up rates and raising debt.

Wayne Brown has proposed to increase the pay of bus drivers. Photo / Jason Oxenham

Selling the shares to pay down debt, the mayor said, is the best investment the council can make for itself.

“I have the mandate to stop wasting money and spending $100 million a year in interest to earn a lot less back [in dividends] is a total waste of money and must stop,” he said.

Ever since his first budget proposal before Christmas, Brown has made the sale of the council’s 18 per cent shareholding in Auckland Airport the centrepiece of a plan to address a budget hole, now standing at $325m, and an election pledge for the council to “stop wasting money”.

Last week the Herald reported that Brown believes he only has nine votes to sell the shares with 12 votes against.

His final mayoral proposal includes:

*An overall rates increase of 9.8 per cent, but holding household rates at 6.7 per cent [rate of inflation], leading to businesses paying more in rates.

*Restoring full funding for arts and culture grants, and most social services, including Citizens Advice Bureau, homelessness initiatives, the Southern Initiative, plus sports and recreation.

*Restoring plans to cut Local Board spending by $16m and developing a fairer funding model for boards.

*Using $200m of proceeds from the airport share sale to complete overdue community projects, including Manurewa’s War Memorial Park upgrade and Avondale’s Te Hono library and community hub.

*Reducing permanent savings to Auckland Council, Auckland Transport, and Tataki Auckland Unlimited from $125m to $74m.

*Some additional debt of $100m, including $20m for storm-related costs.

There is money in the budget for the storm events. Photo / Supplied

Brown said he is still going to use a mix of the four levers initially proposed - selling the airport shares, rates, debt, and spending cuts - but had listened to the record amount of public feedback running to more than 40,000 submissions.

“No one wants to cut services for communities in need, nor higher rates bills in this cost of living crisis hurting households when they can least afford it.

“Borrowing to fill a hole just kicks the can down the road for next year and the year after that. That is just the sort of dumb thinking that has got us into this hole.

“My final budget proposal sets the groundwork for overhauling Auckland Council finances to make Auckland a resilient city, that delivers the services Aucklanders need.”

Among the surprises in his final proposal was paying bus drivers more and restoring suspended bus services by putting back $10m of the $25m cuts to AT together with the $10m it has already saved, and softening Tataki Auckland Unlimited’s budget cut from $27.5m to $17.5m to attract major events and visitors to the city.

Brown also wants to lock the debt savings from the sale of the airport shares by lowering the debt to revenue policy limited in the future, and ensuring there is debt headroom for future shocks, such as the City Rail Link and storm events.

This year’s $2.8 billion capital spending budget will be reprioritised with $205m of spending going to renew park, community, stormwater and transport assets damaged by the summer storm events.