The Front Page: Auckland, Wellington council finance crisis – what it means for you

Auckland mayor Wayne Brown faces some tough challenges coming into the new 10-year budget. Photo / Michael Craig

Two of our largest cities are facing tough budget decisions.

Both Auckland and Wellington have budget holes that need to be repaired by cutting services, reducing large-scale plans or raising rates. There will likely be a combination of both of those things.

Auckland mayor Wayne Brown opened the books last week, showing NZ Herald Super City reporter Bernard Orsman both the state of affairs and why Auckland Council will need to raise rates.

Orsman tells The Front Page podcast that Auckland is facing a string of issues that have coalesced to create a financial strain on the city.

“It really does boil down to budget pressures,” says Orsman.

“There’s inflation, interest costs on $12.4 billion debt and depreciation. These have been cited by Mayor Wayne Brown as the three costliest challenges facing the council heading into the new 10-year budget.

“Add to that you’ve got falling revenue post-Covid and the ongoing problem of a growing population as well as decades of under-investment in infrastructure.”

The council has suggested rates could rise by 13 per cent and water bills by as much as 20 per cent because of these financial pressures.

“Currently, the average household in Auckland pays about $3560 a year in rates and a further $1340 dollars in water bills,” says Orsman.

“Combined, that’s about $4900, so pretty much $5000 a year goes to council for services.”

Auckland Council isn’t alone in struggling to make ends meet.

It was recently revealed Wellington councillors were discussing their city’s financial woes behind closed doors.

Wellington-based senior reporter Georgina Campbell broke that story and joined The Front Page to explain why our capital city may need to cut spending by tens of millions, if not hundreds of millions, of dollars.

The common theme across both Auckland and Wellington is a general discontent about the relationship between local and central government and how much funding is actually provided to local councils to do the things they need to do.

“Incredibly, central government agencies pay no rates and charges on their properties, and there was a big report into this issue,” says Campbell.

“The report said there’s nothing to stop this from being charged now. All that is needed is the political will to do so. This is just one thing that would help councils out. The report said central government paying rates would be a signal of good faith a sign of central government commitment to a more equitable funding model.”

So how exactly could the relationship between central and local government evolve? And what needs to happen to ensure our major city councils avoid financial catastrophe?

Listen to the full episode of The Front Page podcast to hear more from Orsman and Campbell on this pressing issue.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. It is presented by Damien Venuto, an Auckland-based journalist with a background in business reporting who joined the Herald in 2017.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.