Public land used for golf courses, such as Chamberlain Park in Mt Albert, is not included in Auckland Council's list of options for increasing budget revenue. Photo / Dean Purcell
Public land used for golf courses, such as Chamberlain Park in Mt Albert, is not included in Auckland Council's list of options for increasing budget revenue. Photo / Dean Purcell
This week the Herald is backgrounding the key issues of Auckland Council’s draft budget for 2023-24
Part 3: Rates, debt and other income sources
Auckland Council gets only 37 per cent of its revenue from rates. Transport fares and a range of other fees and income sources make up therest.
Next year, with rising costs, and rising demands, council proposes to raise the general rate by 7 per cent, plus another 1 per cent for disaster management, which was added after this year’s big storms. But the extra targeted rates for water quality and environmental spending are being held back.
The net impact for residential properties is an average rates rise of 5.66 per cent.
This equates to about $185 a year, or $3.50 a week. Council also has a long-term strategy to reduce the proportion of the overall rates revenue paid by businesses, which is to be “paused” for a year.
At 5.66 per cent, this is a rates rise less than the rate of inflation. A lot less than in many other cities: Wellington, for example, is considering a 12.8 per cent rise.
Is it enough, considering council has a $300 million deficit to plug? In addition to the rates rise, council proposes to cut services, sell its shares in the airport, take on a bit more debt and raise other revenue. It’s now asking for public feedback.
Councillor Julie Fairey, representing Albert-Eden-Puketāpapa, has suggested the city needs a bigger and better debate about rates. “We need a tough conversation about it,” she told her colleagues in December, when the draft budget was adopted for consultation.
Councillor Julie Fairey, from the Albert-Eden-Puketapapa ward. Photo / Dean Purcell
What about all the other fees, charges and fines that council charges, or could charge? It’s looking for public guidance: should we pay more for swimming pool entry, getting a building consent, safety inspections in restaurants, catching the bus, registering the dog, taking rubbish to the landfill, parking the car, visiting the art gallery?
Whatever your answers, council likes to say budget proposals should be “credible, sustainable, affordable and implementable”.
What about taking on more debt? Council has maintained a very high credit rating and its debt-to-revenue ratio is less now than it was pre-Covid. It could manage more.
Debt is used for capital expenditure (capex), which has risen from $1.3 billion just a few years ago to $2.8 billion in the 2023-24 budget, in a total budget of around $5 billion. That’s council addressing the infrastructure deficit, especially in transport and water management.
“Debt is not out of control,” says deputy mayor Desley Simpson. But it does now stand at $11.4 billion and, Simpson believes, “it’s important to pay down, because of inflation”. The budget proposes to sell the council’s $2 billion shareholding in the airport, with the money to be used to pay down debt.
But the budget also allows for “short-term” additional debt of up to $75 million. It’s a capex contingency that council hopes it won’t have to call on.
There is no plan to sell the port, but council is asking the port company to increase its contribution by at least $10 million over its earlier forecast. The company has accepted this.
Whau councillor Kerrin Leoni asked in December, “Has everything been looked at, including the golf courses?”
There are 13 golf courses in Auckland operating on council-owned or managed land and the budget does not propose any change to existing arrangements.
Officials told councillors in December this was a “complicated” issue. They suggested it would be better suited to debate when council renews its 10-year budget. That process starts later this year.
Higher rates and fewer cuts, or should that be the other way round? Or has the council got it about right?
Auckland Council budget: Have your say
All this week, the Herald is backgrounding the key issues.
Public consultation on the draft Auckland Council budget 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.
