Auckland Mayor Len Brown says Aucklanders have made it clear they do not want strategic assets to be sold, and other alternatives to rates rises are being considered to fund the city's projects.

His comments come after Local Government Minister David Carter hinted at a Government preference for councils around the country to opt for asset sales to fund projects, rather than increase rates.

The $2.86 billion central rail loop remains the prime project in Mr Brown's first 10-year budget, which faces a bumpy ride from councillors on Wednesday.

The day before Finance Minister Bill English unveils the Government's Budget, Mr Brown and councillors will lock horns in the Auckland Town Hall over a $58 billion Super City budget.


Mr Brown said the council could not back off the need to invest in the future of the city and deal with major growth, but the budget had to be fair, just and prudent to the city's 516,000 residential and business ratepayers.

Despite growing criticism towards the central rail loop, Mr Brown said it still had strong support.

The mayor's determination for the 3.5km underground rail loop will be tested with a call by Citizens & Ratepayers and other right-leaning councillors to freeze funding on the project until it has Government backing.

The Government has serious reservations about the project.

Orakei councillor Cameron Brewer yesterday said it was crazy to spend $112 million in the coming financial year on land purchases for the rail loop when it had no funding certainty.

Mr Brown has put the Government down for half the cost of the project in the 10-year budget. Ratepayers are being asked to pay 14 per cent ($400 million) and alternative funding sources, such as tolls, the remaining 36 per cent or about $1 billion.

Alternative funding including tolls, higher parking charges and a regional petrol tax are expected to be settled on in the next six weeks, most of which need Government approval.

C&R leader Christine Fletcher said the time was not right for a big budget and a big spend-up.


But Mr Brown, who is proposing an overall rates increase of 3.6 per cent this year, said rates would stay around the rate of inflation for the next 10 years.

Local Government Minister David Carter last week said the Government was close to agreeing to a request from Mr Brown to smooth out the changes so no ratepayer got an increase or decrease greater than 10 per cent.

Last night Mr Brown refused to say if his election promise of completing the rail project by 2017 at the latest was slipping, saying he believed it could be completed "this decade".

Another sticking point is the level of the uniform general charge, which Mr Brown has vowed to keep at $350.

Apart from shaving $10 million off a cruise ship terminal and applying pressure on Waterfront Auckland not to come to ratepayers to put $16 million into a super yacht facility, there are few signs of cost-savings by Mr Brown to his draft budget.

Asset sales urged

Ahead of the council's budget announcement, Local Government Minister David Carter urged councils around the country to consider the sale of strategic assets rather than rates rises to fund projects.

Mr Carter told TVNZ's Q & A yesterday that local governments were in a similar position to central government, which intends to balance the books by selling up to 49 per cent of shares in the state-owned energy companies, and a further stake in Air NZ.

"If they [local governments] find a way where they can sell down some of their assets to maintain the funding, to deliver some other infrastructure required within in their communities, in principle, I would support that. But having said that ... it would still be a decision for local councils to make," Mr Carter said.

"If they had shares in an airport or shares in a port company, they may well decide they could sell down some of those shares to help them provide the infrastructure which their community's demanding of them.

"I think if you look at my own city of Christchurch where we clearly have an extraordinary situation, the Christchurch balance sheet is strong with a number of assets, the council needs to make the decision.

"But from a ratepayer point of view, from a ministerial point of view, I think the Christchurch City Council needs to think carefully about rationalising some of those assets to help it meet its huge challenge with the rebuild of the city."

He said if any council was proposing to put up its rates by "2 percent, or 3 percent, or 4 percent above inflation" he would be asking why, and the Government did have the ability to intervene.

"We want to put some financial tests and thresholds on to local government so that they must justify their rate increases, justify their debt increases."

Len Brown told TVNZ's Breakfast this morning Aucklanders have made it clear they did not want strategic assets, such as shares in the Port of Auckland and Auckland International Airport, to be sold.

Mr Brown said the council would be consulting with ratepayers over alternative funding methods, such as road tolls, network charges, infrastructure bonds and petrol charges, in the coming weeks.

Labour's state-owned enterprises spokesman Clayton Cosgrove said Mr Carter's comments proved beyond doubt the Government's intention to see Canterbury's assets sold.

- Herald Online, Bernard Orsman, APNZ