Auckland Mayor Wayne Brown. Photo / Dean Purcell
OPINION:
The submissions and surveys are over but there’s still some shouting to come. Auckland Mayor Wayne Brown and his officials are rewriting their initial budget plans for the 2023/24 financial year and councillors are meeting with them in a series of closed-door workshops to thrash out the options.
They know from the public consultation there is public support for raising rates and debt levels, for selling some of the council’s airport shareholding and for making some cuts to spending. But not cuts of the severity proposed.
They also know the gap between council’s current income and spending levels has risen, because of inflation and flood responses, from $295 million in December to $375m now. It would be a brave person to bet against the weather forcing the gap higher still.
Brown hopes to present a new budget to a special meeting of council on June 8, with the final decision scheduled for June 29.
I have some modest proposals that will surely help.
1. Higher rates rises
The current proposal is for a 4.66 per cent rates rise, plus another 1 per cent for flood response measures. This will bring in $113m, accepting the council’s rule-of-thumb that every 1 per cent rise adds $20m to the revenue.
But seriously, why stop there? Even councillor Maurice Williamson, Brown’s razor gang guy, has accepted that a rates rise in line with inflation would be reasonable. That’s about 7 per cent, which would raise $140m. At 13.5 per cent, the extra revenue would rise to $270m.
Given the emergency demands on spending, 10 per cent sounds about right to me. That would raise $200m.
2. More debt
The council is not facing a financial crisis, despite what the mayor and some councillors say. It has high ratings from the credit-rating agencies: AA and A-1+ with a “stable outlook”, say Standard and Poor’s.
That is the very definition of “not in crisis” and it means council is well placed to borrow more.
In fact, far from coping with a crisis, Brown’s proposal means the council’s debt-to-assets ratio would fall from a high of 25.6 per cent to 18.7 per cent: the lowest it’s been since 2012.
The draft budget already includes $75m of extra borrowing. This could rise to $140m and still be within the council’s own guidelines. But the council can change its own rules: it will have to do that for the airport shares, and it could also do it for the debt ceiling.
How about borrowing $175m?
3. Raise other revenue
The council has other sources of revenue that could be doing more heavy lifting in this budget. There’s $2.6b worth of “vacant” land, which needs rigorous review.
The Supreme Court has decided the council is within its rights to collect a “bed tax” on hotel visitors to the city. They can roll that out right now.
Go Media, an outdoor advertising company, has just bought naming rights for Mt Smart Stadium. More of that, please.
And parking charges can be raised. There’s social good in that, as well as revenue.
The technology won’t be ready for congestion charges next year, but with Government support it can certainly be factored into the 10-year budget, planning for which starts later this year. Similarly, there are 10 golf courses on council-owned land and it is preposterous the council is not even looking at any of them.
The council should commit to a target for its other revenue sources: how about $100m?
4. Airport shares sale
Sale of the council’s 18 per cent share in the airport would raise over $2 billion, which would then be used to retire debt, saving about $90m in annual debt repayments.
Perhaps the best thing to be said about selling these shares is that it shouldn’t be a first option. Rates, debt and other revenue should be far more deeply explored before getting rid of an asset with long-term revenue potential.
In the above, even excluding the airport shares, I’ve proposed $475m in extra revenue.
5. Well-planned reform
We’ve been told the council “wastes money”, but the draft budget isn’t a coherent plan to fix that. It’s a mix of ideology and easy options.
The ideology says public bodies shouldn’t own public assets like airports and ratepayers’ money shouldn’t be wasted on community projects.
Taking the easy approach means not selling golf-course land, because it’s too hard. But they’ll cut bus services, even though it’s a terrible idea, merely because it’s easy.
This is the wrong way to proceed. When that 10-year budget rolls around, the thinking has to be far better.
6. More money for buses
After the chaos last Tuesday, it has become an urgent priority to make Auckland’s bus services more frequent, reliable, comprehensive and faster.
That includes rapid employment of more drivers and better pay and conditions to make it possible. Smart traffic-light sequencing and other tech to boost efficiency on the roads. More bus priority lanes, created with day-long clearways, dynamic lanes for morning and evening peaks and pop-up lanes. And lower fares.
This is a crisis. There can be no functional future for this city without a good bus network, and yet the council and AT are perilously close to losing public confidence that such a thing is even possible.
It’s not just a disaster-response issue. It’s also a congestion issue, a climate issue, an equity issue, a safer-streets issue. It’s hard to think of anything more important in the council’s spending. Yet, astonishingly, Brown’s draft proposes a $32.5m cut to AT’s budget, alongside a 6.5 per cent fare increase.
Both those things should be abandoned. The buses need more money, now.
7. More for flood responses and resilience
Here’s a question for the mayor and council: if you could know now that next year’s storm season - late summer and autumn - will be as bad as this year’s, what will you do between now and then to mitigate the damage?
Whatever the answer is, you should do it.
8. Community development
The draft budget slashes spending across a wide range of community services, including events, facilities, sports and culture, services for the elderly and for young people, help for the homeless. Economic programmes designed to offer a hand up, not a hand out. The Citizens’ Advice Bureau, which every year helps 163,000 people who cannot afford to buy the legal advice they need on their own. And much more.
There’s a theme to these cuts: they bite deepest among poorer communities. How is that justifiable?
9. Long-term planning
Another theme is cuts to strategic spending, because the damage isn’t immediately apparent.
This is the thinking that produces new suburbs without a masterplan, allows existing town centres to become dysfunctional, leaves the city without major international events, creates gridlock on the roads, underpowers our tech sector and gives us inadequate drains.
It’s always tempting to assume the council-controlled organisations like Tātaki Auckland Unlimited, Watercare, AT and Eke Panuku are sucking up ratepayers’ money with little to show for it. And, for sure, we need them to be accountable. Mayor Brown, to his credit, has asked for and received higher levels of reporting from them all.
But that reporting has also revealed more about the good work they do. These are the agencies that plan the strategic development of the city. The budget cuts they face will inevitably compromise this work.
10. Arts funding
There was an early fuss about cuts to the arts budgets, which seems likely to mean the Auckland Art Gallery and other high-profile recipients of council funds will survive reasonably intact. That’s important.
But it’s also important that it doesn’t happen at the expense of community and semi-professional arts groups. They need their funding just as much.
The Resources Minister came to the select committee sporting a Make NZ Great Again hat.