Auckland councillors will start getting to grips with the financial impact of Covid-19 behind closed doors at two meetings this week.

The audit and risk committee will receive a financial risk update tomorrow, followed by a financial paper outlining various scenarios and budget update to the emergency committee on Thursday.

Finance committee chairwoman Desley Simpson said requirement and disclosure rules by the NZX stock exchange are a reason for the reports being considered behind closed doors.

Tomorrow the Treasury will release economic scenarios on unemployment, GDP and the ability of the economy to recover, which are likely to feed into the council's response.


Council acting group chief financial officer Kevin Ramsay said Aucklanders may get an idea of the council's financial position in the next couple of weeks.

"Like many other organisations across New Zealand, Auckland Council is faced with a rapidly evolving situation with a great deal of uncertainty as to just what the future will hold once we move into the different stages of the Covid-19 response," Ramsay said.

At this stage, he said, the council can only model a range of different scenarios and start to consider what impacts these may have on this year's results and next year's budgets.

Once the audit and risk committee reviews the processes and the emergency committee considers potential scenarios and understands the likely implications, the council can release some projections, Ramsay said.

"This will be done in a co-ordinated way to ensure that council meets its statutory and stock exchange obligations. It's too early to say when this release might occur but better indications should be known in the next couple of weeks," he said.

The council is taking some big hits from the impacts of Covid-19, including the loss of dividends from Auckland Airport and Ports of Auckland.

It is bleeding money from the fare box for public transport and parking; fewer cars on the road means less income from the regional petrol tax and matching Government contributions; revenue from swimming pools, community centres, concerts and sports venues has dried up. Income is falling from development contributions and consenting work.

Non-rates revenue accounted for 63 per cent of income for the council and the five council-controlled organisations in the 2019 financial year.

It is not known how many of the city's 500,000-plus residential and 40,000-plus business ratepayers will have trouble paying rates, and the effect this will have on the $1.9 billion rates take. The Government's official Covid-19 advisory website


A set of scenarios being presented to councillors this week will feed into this year's budget and rates increase from July 1.

Goff appears to be sticking to a planned 3.5 per cent rates, saying it will be hard to reduce the figure without compounding the council's difficulties and cancelling capital projects.

"Keeping these projects in play will assist with ensuring jobs and incomes vital to our recovery as a community and country from what will be the worst recession since the 1930s," he told the Herald last week.

His preference is targeted assistance to those most in genuine need through rate deferrals and postponements.

The council has shed hundreds of temp staff, contractors and consultants, the mayor and executive leadership are considering pay cuts and desirable, but not essential, projects have been put on hold.

Phil Goff is keen for construction to start again once the lockdown is over. Photo / File
Phil Goff is keen for construction to start again once the lockdown is over. Photo / File

The council is also determined to stick to its debt-to-revenue ratio, which at 245 per cent is not far off the ceiling of 265 per cent, which if breached could lead to a credit rating downgrade and higher borrowing costs.

"With revenue already down, a further reduction in rates would compound council's difficulties, requiring the cancellation of capital projects which the city needs and which could contribute to recovery," Goff said.