Auckland Deputy Mayor Desley Simpson. Photo / RNZ, Dan Cook
Auckland Deputy Mayor Desley Simpson. Photo / RNZ, Dan Cook
Part 1 of a 6-part series
From tomorrow, Auckland Council is calling for public submissions on its draft budget for 2023-24. This budget proposes to sell the council’s shares in Auckland International Airport, cut services, raise fees, cancel public events and boost disaster-response spending. Residential rates will rise by anet average of 5.66 per cent.
At stake is revenue and spending of about $5 billion.
Deputy Mayor Desley Simpson calls it “the most important budget we’ve done in years”. There are several reasons for her to think that.
The first is the climate crisis. In the aftermath of the Anniversary Weekend floods and Cyclone Gabrielle, the budget proposes an increase of $20 million for emergency responses and stormwater maintenance. This will raise residential rates by an average 1 per cent.
Second: The status quo is not an option.
Council is required by law to produce a balanced budget, but unless changes are made to revenue and/or spending, in 2023-24 there will be an estimated shortfall of almost $300m.
This is partly because of inflation and partly because the council is trying to make up for years of underspending on roads, drains and other infrastructure. It’s also because the Covid pandemic has reduced council revenues, especially in bus and train fares.
The shortfall is not because council has become “bloated”. Since 2010, the council’s ongoing “value for money” review has trimmed $2.4b from spending, including $260m in the last term. And in 2020, when Covid struck, council slashed its spending by another $900m. Hundreds of staff were laid off, capital spending was delayed and many services were put at risk.
Third: The new budget will hurt. It’s proposed to achieve a further $125m worth of “operational efficiencies” across the council group but, as Simpson says, that can no longer be done without cuts to services.
Swimming pools, libraries, the zoo, art gallery, sports centres and community halls could have fewer hours, higher fees and fewer services. There will be less money for the arts. Less small-scale and local business support. Less for public events like Diwali, the Lantern Festival and summer music and movies in parks.
Also, less new spending on public transport, cycleways and managing kauri dieback. Less money for local boards. Less capacity for Auckland to bid for international events like sporting world cups. Citizens Advice Bureau and council-run early childhood centres will lose their council funding altogether.
Uncertainty over Three Waters also threatens the council budget, in both revenue and spending.
Fourth: Selling council’s 18 per cent shareholding in the airport means a big change to existing policy.
The shares are worth $2.2b. If sold, the money will be used to pay down debt, which currently stands at about $9b, and is expected to reduce the council’s interest payments by $87m a year. That’s the equivalent of a 4.5 per cent rates rise.
But while the debt is very large it’s not out of control and the shares can generate revenue. Next year, a dividend of about $39m is expected.
Councillors supported this austerity budget in draft form, with a vote of 20-1, so it could go to public consultation. But few agree with everything in it and several have stated publicly they will fight some of its proposals.
Right now, they want to know what the public thinks about how to close that $300m gap, and what tradeoffs might be acceptable. Would you pay higher rates to keep swimming pools as accessible as now? Should the city hold onto the airport shares and increase debt instead?
And, always a conversation starter: Is Auckland Transport spending too much or not enough on cycleways?
Cycleways: Just one of many issues up for public debate with Auckland Council's new budget. Photo / Michael Craig
Council budget: Have your say
All this week, the Herald will background the key issues.
Today: Overview: ‘The most important budget in years’
Public consultation runs from February 28 to March 28. You can have your say online, or by phoning or writing in. The council is also holding dozens of “drop-in” events, community barbecues and public meetings. The details are here.
