The country may have done comparatively well in responding to COVID-19 but that hasn’t stopped it from kicking a $525 million hole in the Auckland Council’s budget. Their response to that looks set to kill more Aucklanders than the virus did.

The funding hole has come about because about 60% of the council’s revenue comes from things other than rates, such as

  • reduced dividends from the airport and port
  • less revenue from events and use of council services
  • an expected reduction in money collected from public transport fares, parking and the regional fuel tax

At the same time there will be higher costs for services, such as the need for additional cleaning.

On Friday the council started consultation on their Emergency Budget for the next financial year (starts 1 July) for how they’ll respond to this situation. It includes significant cuts and deferrals to both operational and capital costs across the board, meaning many projects won’t be happening soon. This of course is also at a time when the government are wanting to get underway as many projects as possible in a bid to aid the economic recovery. The council are proposing two options for rates rises, 2.5% or 3.5% with the cuts slightly less severe for the higher rate.

Below are the impacts across the council family but for this post I’m just going to focus on the transport impacts.

As you can see, there is a reduction in CAPEX of between $205 million and $245 million depending on which rate increase option is chosen. For some reason they don’t give the original budget but the document suggests they are planning on operational savings of around $37 million. This would be made up of the figures below.

  • reduced staff costs, professional costs and contract staff, resulting in $20 million saving
  • setting an additional savings target for Auckland Transport, resulting in $7 million saving
  • some reductions in the number and frequency of public transport services, resulting in $10 million saving.

However, on that last point, a briefing message sent out to stakeholders by AT on Friday suggests the PT reduction will be $20 million – which possibly represents the actual impact once the matching NZTA contribution is also taken out. Cutting services is not going to be pretty although I hope that perhaps some of the costs can come from reducing the number of expensive peak buses that need to run – as noted on Friday.

But it’s the capital budget that’s taking the biggest hit.

The figures listed include $395 million for the council’s share of the City Rail Link which even under the 3.5% increase scenario leaves just $700m for AT projects. Within this, almost $600 million is needed for projects already contracted and underway, such as the Downtown works, Puhinui Interchange, the remainder of the 15 new electric trains. That doesn’t leave much for anything else – although oddly they seem to suggest the NZTA will only contribute 40% towards projects instead of a more usual 50%. That cut in contribution needs to be challenged by AC/AT.

The council/AT say the reductions to fit within the $700m envelope include:

  • pausing or cancelling of safety improvements include any further rollout of red-light cameras in urban areas, the rural road delineation programme, and improvements to high risk intersection and pedestrian crossing improvements
  • pausing or deferring work on all walking and cycling projects not in construction including Glen Innes to Tamaki Stage 4, Point Chevalier to Herne Bay, Waitematā Safe Routes programme, Links to Glen Innes, and the Great North Road project.
  • no further investment in electric buses and charging infrastructure is likely to be made in 2020/2021 other than three electric buses already on order
  • deferrals to multi-modal projects such as Glenvar Road, East Coast Road, Lake Road, Esmonde Road and Lincoln Road
  • delays in the ferry strategy development and implementation
  • increased roading maintenance costs in medium term as a result of deferred renewals.

Basically, if it wasn’t already underway, it’s not happening this year. In the briefing they sent, AT included this summary of their projects (click to enlarge)

Perhaps most concerning is this comment, also from the briefing.

The potential outcome under these scenarios is that $312m to $352m of “shovel ready” projects will be paused in FY21. It is likely that very few new projects will go into construction or business casing and design in FY21.

Our work to progress our Vision Zero outcomes will be delayed with likely increases in death and serious injuries on our roads. Plans to accelerate mode shift will also be challenged through delays to the cycling programme and public transport improvements, and our commitment to deliver climate change outcomes will also be impacted.

A number of jobs will either be retrenched or not created under these scenarios.

The supporting information puts some figures around the road safety implications.

The estimated impact of a potential Road Safety Programme funding reduction from $107.7 million to $36 million in 2020/21 is an immediate reduction in annual DSI savings from 70.7 to 19. Based on initial estimates, 51.7 DSI not saved in 2020/2021 could mean, worst case scenario, up to 10 lives not saved along with more than 40 serious injuries

And of course the delays will flow through to subsequent years too as there is likely no plan to ‘catch up’.

Under the 2.5% increase scenario they say further cuts would be made to programmes such as the work supporting sprawl and further reductions in renewals. They also say that under that scenario they propose reviewing fares and removing some existing concessions, charging more for peak services, and charging for park and ride – no mention is given on the subsidised devonport taxis, something that should definitely be cut.

Some of these things, such as charging for P&R, they should have been doing years ago and should be part of the 3.5% option. That it’s not should raise questions about just how focused on priorities AT are. A crisis like this shows up what you really value and it’s when more than ever you need to fall back on your strategy to progress what you think is really important. For council/AT I worry it’s showing that deep down they see climate/safety/mode shift as nice to haves but not core business.

In the below video they say “Imagine pedestrian-friendly zones in neighbourhoods, so people can go about their lives safely, children can play, walk, or cycle to school on low-speed roads”. Well you’ll have to imagine it because it won’t be happening any time soon.

Perhaps the council should be asking the government to cover more of the costs for the City Rail Link. The CRL in particular, but all rapid transit is the public transport equivalent of the motorway network, which gets 100% funded by the government despite most trips on it being ‘local’, not interregional. Every other rail project is equally paid for by the government. This could help address some other issues too – for example there’s a bit of a fight going on right now over who owns what once the project is complete, including development rights. If the government took it over this would resolve that issue. Perhaps they could cover those costs out of the money they planned to but haven’t spent on light rail.

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  1. No parking levies introduced for the city and town centres yet? We keep hearing that modeshift is a “slow” process… and it certainly is if you ignore all the usual tools. Far better to cut safety programmes instead, so people can pay with their lives.

    I wonder if that decision not to issue fines for illegally parking in the public realm during Covid looks so wonderful now. Just who did that benefit again?

    Pity AT doesn’t do cheap, tactical, strategy-aligned work that delivers modeshift, emissions reductions and safety at budget prices. But I suppose construction-heavy work that pumps the traffic volumes is better for some: It keeps the construction companies in road building, kerb-moving and intersection widening work for years to come. This seems to be more important than delivering low traffic neighbourhoods that would have positive impacts on the network by lowering traffic volumes.

    I hope that CCO Review has sharp blades.

  2. “Perhaps the council should be asking the government to cover more of the costs for the City Rail Link” – it looks like they are asking via an ultimatum to me…

    If they are going to cancel / delay stuff, why not one of the big projects instead of every single little project? If they pause their contribution to the CRL for example for a year or two would it really make that much difference? The end date always seems to be 2 years later than originally planned anyway, this would just be another delay. And the big projects just seem even more unfair now; the people lucky enough to live near rail get $3 billion, everyone else gets nothing at all.

    And as Miffy pointed out, where is our regional fuel tax going? It isn’t a slush fund for the council to do what they like with is it? If they aren’t building anything with it I wan’t mine refunded…

    1. You’re probably right on CRL.

      On RFT, I disagree because:
      1/ Why would RFT be any less susceptible to Covid cuts than other sources of funding?
      2/ Driving still imposes externalities well beyond RFT. They shouldn’t have had to tie RFT to any particular projects to sell it in the first place. People are dying from crashes with vehicles. Fixing that is what needs to be the highest priority for any funding available.

      1. I agree that driving does impose externalities and it should be taxed more, however I don’t see why that should be regional and I don’t see why that money should go to Auckland Council for them to use to defer rates rises. I’d prefer that extra tax to be spent on transport improvements that decrease those externalities; walking, cycling, PT, etc. I don’t see why COVID should change that.

    2. They can’t ‘pause’ the CRL, it’s already contracted and under construction. We’re not going to have hundreds or thousands of specialists sitting around on their hands for two years.

      1. I would hope the contract would have out clauses for events such as a major earthquake or say a global pandemic?
        Its hard to know what the long term effect of COVID will be. But a reasonable guess would be that there will be some amount of increase in working from home (I had never considered it prior but now I will probably do it at least 1 day a week) that will result in some amount of decrease in demand for PT and peak traffic. I also guess there will be some amount of increase in demand for walking and cycling. Yet AT/AC have decided to drop all walking and cycling projects when they are most needed and continue with the budget sucking PT project.

        Lets face it, if AC pulled out of the CRL due to COVID, the government would keep it going, even if it was some form of loan to AC.

        1. Having been involved in major projects (outside of NZ) that have been paused and then restarted. I suggest there are two probable outcomes. The works will be substandard and the costs will be 50% to 100% greater. This is from a fairly small sample, but I have only ever heard similar situations from colleagues that dealt with similar situations.

    3. If you want to see where the RFT is going, travel to Panmure or Puhinui. Also, of course, the pandemic lockdown drastically reduced the revenue raised by the RFT.
      And please, no more of the parochial small village mentality, the CRL will benefit the whole of Auckland, it is not delayed other than the effects of the pandemic shutdown, it should be paid for in the same manner as the Waterview Tunnel.

    4. I don’t recall pointing that out. Must have been my idiot brother OKmiffy. Presumably the money from the regional fuel tax is getting shovelled into the cash mulcher called CRL.

        1. I worked at North Shore City Council in 1991. That year they diverted a huge sum from the transport budget into the Bruce Mason theatre project as it was out of money. My job changed from doing projects to answering the phone calls from people complaining that we were not doing projects. I was under instructions from management to tell people the funding had not been diverted to the Bruce Mason Theatre even though it had been. So I lied to people as instructed until I left and went to London in search of a job worth having.
          But hey you can trust what you read on the internet if you wish.

        2. Yes back in 2020 when Councils tell the truth and are open and honest particularly when it comes to funding their pet projects. All the PR people Council’s employ will make sure the public knows the full story.
          Dude the only real change since then is the bullshitters seized control.

  3. Heidi, I wouldn’t think the roading companies would be the hold-up for modeshift works. First, AT is the customer and the customer is always right. They should expect to purchase what they need on behalf of the people of Auckland. Enterprise will adapt – look how companies coped with the Covid-19 shutdown.
    Second, skills in road building, kerb moving and intersection widening should be easily translated into cycleway building, which will necessitate more kerb moving and intersection narrowing is just widening in reverse. Those works will be needed for modeshift on main arterials.

    1. All good points.

      Do you have an alternative suggestion, then, for why AT is eschewing the cheaper, better way forward? There were enough cities to learn from before Covid. During Covid, dozens of others have leapt into the civilised world, using tactical urbanism to create cycle lanes on arterials and to block rat runs, creating low traffic neighbourhoods. Is AT ignoring this, do you think, and refusing to see how these improvements are being locked in permanently?

      1. It’s interesting. Institutional inertia and provide capture are often cited here. Supposedly we the people tell surveys we want these things, but I wonder – do we say it to look good? Because it often seems that as soon as any effort is made to deliver it, all that is heard is complaints from those who don’t want change. Maybe we need a better means of capturing what people actually do want and are prepared to pay/sacrifice for. Then a better structure for translating that into delivery.

        1. I think this is a very good point Ehlana. And would extend it and say the organisations don’t offer the public a really good vision of what they could have. My local facebook page is up in arms over the 30kmph streets programme. You will always get the negative responses but I wonder if instead of saying you will just get signs and speedbumps a more visonary design was offered as a way of creating desirable neighbourhoods.

      2. My theory is that both AT and NZTA are dysfunctional bureaucracies that, at a deep cultural and institutional level, will not countenance any risk of being wrong. Being wrong is seen as damaging to the organisations reputation, which reflects badly on senior leadership and can be career limiting. In this mindset ‘wrong’ becomes any negative publicity, no matter how unrepresentative of public opinion.

        The status quo is already accepted as ‘normal’ so if the organisation maintains the status quo they can never be wrong. Innovation, by definition, involves deviating from the status quo. Trying something new involves risking trying something that is wrong.

        New ideas become viewed with suspicion. What if they are wrong? No one wants to make decisions that later turn out to be wrong. No amount of consultant’s reports or overseas case studies will convince any middle manager to take the risk involved in making a decision.

        Preserving the status quo is seen as preserving one’s job. If you were never wrong then you can never be fired. This is important because career bureaucrats from these organisations can’t get private sector jobs. The private sector knows how dysfunctional and resistant to change the organisation is so don’t want to hire those people.

        New hires to the organisation either find the resistance to change suffocating or comforting. The ones who don’t like it aren’t senior enough to bring about change so they leave. The ones who like it stay long term and reinforce that culture of preserving the status quo.

        And so the organisation carries on. Trapped in a self-reinforcing cycle of always staying the same because internally it is seen as minimising the risk of being wrong. No matter the effects on society, the environment and the economy.

        1. Sadly, I fear that is true. We pride ourselves on our “no.8 wire” innovation, but innovation is a process of failing until you get it right. How do we change the public culture from lynching mistakes (part of tall poppy syndrome) to “fail fast” – try, fail, learn, try again?
          This should be a good time to talk to people about what they liked about their lockdown streets and how that could be extended. For example, recognising the present reality of locals parking their cars on the street, which actually already slows traffic naturally, and combining this with some paint indicating the remaining road is a 30km/h zone which is shared by pedestrians, bikes and cars. Some planter boxes could narrow the entrances from faster streets, to help with the slow down message.

  4. Surely all of these cuts, or shortfalls are where the government could easily apply “stimulus” nationwide?

    Keeping the country running business as usual would be beneficial in so many ways. Delaying these, and the catch up hangover will drag on progress for a long time to come.

    1. I suspect this is the aim of this budget, get the council’s financial position out into the public realm to help nudge the government along with any decisions on shovel ready projects.

  5. Back of envelope calculation suggests that charging a reasonable fee for park and ride would cover approximately one-third to one-half of the $10 million p.a. shortfall in funding for PT operations.

    1. The three big ones on the northern busway (Albany, Constellation, and Hibiscus Coast) would cover 1/3 of that all on their own. Assuming $5 per day, one user per park each day and half occupancy on weekends and public holidays.

      1. And if AT can’t find $20 million from park and rides then they can certainly find it by charging market rates for all their other parking. Why should parking be free in some suburbs on Sundays (are the buses)? Why should the weekend price for Victoria St car park never be adjusted for inflation? Why do you have to pay to watch little Phil or Billie swim at the local pool, but anyone can park there for free. (I also note that the Takapuna Leisure Centre appears to offer free parking for those who work in Takapuna, rather than pool users as intended.)

        It is sad that in a climate crisis that Auckland Council/AT are not looking at constructive ways to move mode share away from cars. What is even more disappointing is that the 4% proposed increase for PT fares is likely to hit Aucklanders who can least afford any cost increases.

        1. Yes AT’s zero or under charging for parking just doesn’t make sense. It sure is time to start charging for P&R parking at least something even no where near market rates would help.

  6. None of this takes account of the so-called “shovel-ready” list of projects about to be announced. This will not of itself fill all the holes in Council budgets throughout the land but as Auckland Council represents about a third of the population and presumably a similar proportion of infrastructure spending then I would expect a significant amount will come our way – probably 10s of millions and possibly over a hundred million. As to the CRL, if Government increased its share from 50% to 60% that would relieve Council of about $400 million spread over the next 4 years – i.e. $100 million p.a. So it is possible that up to half of the big hole in Council’s capex budget might yet go away.

    1. From what we have seen so far only big road projects can be considered shovel ready (even those that are far from being shovel ready).

    2. Moving to 60%/40% would bring it in line with stated funding aims for LGWM. This should happen as a matter of principle.

      1. Exactly, central govt can divert that Dominion Rd funding to CRL and save a shit load of jobs at AT and their contractors along with saving a bunch of lives by letting them continue with the important stuff.!

  7. And how about a move to run a more efficient train service? Such as longer trains with less frequency?

    1. The trains already run as 6-car trains where they can. Can’t go any longer till the CRL is complete and we spend tens of millions (or more) to lengthen platforms around the network.
      At peak trains already only run every 10 minutes which is barely acceptable for “rapid transit” lines

    2. Where are you going to find the money in the budget to lengthen all the train platforms to allow this to happen?

    3. Delivering the same total capacity through lower frequency but bigger vehicles is to fail the user. Service quality is not simply a function of all day seat capacity; a ride being available when you want it is much more use than one in an hour. Higher frequency is a function of value for the user in itself, not simply as a means to deliver more seats.

      Turn up and go frequency is highly valuable to riders, and should not be reduced, even if total line capacity is kept constant through bigger vehicles.

  8. Matt L so that means the 6 electric buses that were meant for Waiheke in the next few months won;t be coming now ? .

  9. How about NZ introduces a luxury car tax to help with some of this missing funding? Appreciate it would be more of a Central Govt lever, but revenue could be channelled to Councils and improve equity outcomes.

    The funding cuts as proposed will hit the most vulnerable the most, while the wealthiest will largely be fine. At the very least it could help fund the additional road maintenance costs that heavy (luxury) vehicles impose on roads (even if these costs are marginal). Also, it would free up spending for some of these sorely needed safety and mode-shift policies.

    They have this in Australia, which is not exactly the most progressive place in the world when it comes to transport! 33% + CGT for any vehicle imported over $68 k if it doesn’t meet 7 L / 100 km efficiency standard. Could adjust these settings too

    1. *Of course it’s a broad statement that wealthy people will be unaffected, of course everyone will be, but perhaps not equally…

      *GST lol. CGT, one can only dream…

    2. Luxury car taxes were a protectionist sop to the Australian automotive industry that upped sticks anyway. Like most things, taxes long outlive whatever problem they are supposedly trying to solve.

      We do have a luxury car tax anyway: It’s called GST. If you buy a more expensive car, you pay more GST.

  10. “Council Support” takes the least capex cut apart from Economic and Cultural development, which goes up. Am I reading that right?

    Can’t say the documents are very clear.

  11. Covid19 is a 1 in 160 year event.

    The Council should not be reducing expenditure and should be negotiating with central government and rating agencies to extend debt instead.

    Contraction of local government spending at this point of time simply adds further to unemployment.

  12. Seems generally they have slashed what is not already under contract, mainly funded by somethings else (eg NZTA or targeted rates). The fact that there was only fairly recently a movement towards creating active mode & safety projects means these are the ones that are halted. In saying that, it’s no excuse really just I can see how that has happened or is the easier route to take. Let’s hope they are calling the government’s bluff.

    It is kind of freaky that all the lock down measures really have targeted all their sources of income. Remember they even offered free parking for a time in the city centre.

    Yes agree with Matt that the government should step in and pay more of the CRL. I think it should go beyond “more” and be ALL the costs, past and future, like similar projects around the country. This 50/50 arrangement was a fiddly complicated thing all done under the previous government trying to not to (or be seen) spending money on public transport. It’s a no brainer to save lives, create or keep workers employed, create a better city & get more Auckland votes in the upcoming election.

  13. Matt L. I am very surprised that you have not seen through the councils obvious and cynical strategy with the timing of the “consultation” and media releases!
    In case you missed it, all the projects being delayed are in the council’s wish list for the government to pay for. So clearly all designed to put pressure on / blackmail the government to favour its pet projects over other competing organisations.
    Also suspect you may be wrong re NZTA contributing 40% vs 50% as I think the council numbers were inflated to get the most out of the gov ATM.
    I certainly won’t be supporting the higher rates increase (I don’t support the low one either). I am sure if it is 2.5% there will be some other made up targeted rate that will bring it back up to 3.5% or more.

  14. Wow, Auckland is still having a 2.5% or 3.5% rates rise?! Councils throughout the country have generally responded to COVID-19 by either not having any rates rise at all, or keeping it low. Rates in my area are going up by 1%.

    There’s just so much waste in Auckland Council spending. Down here they mow parks and reserves every two months. In Auckland every two weeks, even in winter when the grass doesn’t even grow! Down here they build a street once and leave it, in Auckland they keep resurfacing streets with chip seal every couple of years whether they need it or not.

    If Auckland Council continues mowing parks every fortnight post-budget cuts, you have a real problem with priorities up there.

        1. Grant I hope you are looking after all those SA/SD carriages that are stored there ? .

    1. …and yet rates are still higher in the Ruapehu District than in many other parts of the country, not to mention the lines charges. You’re right though they do just build a road once and leave it, first time I’ve heard it as a positive though.

  15. I wonder what has happened to the container deposit refund scheme that might be useful in these troubled and uncertain times? It should be shovel ready after the extraordinary amount of time that Council has spent looking at it. Mind you there isn’t that much to get excited about: it is only predicted to create an annual surplus of $181 million; create a significant number of jobs; divert containers from landfill; divert containers to re-use rather than recycling hence saving energy; and it will be paid for by those who cannot be bothered re-cycling.

    No, there is nothing appealing in this scheme that Council should run it; I wonder if Council could pay the private sector to run with the project?

  16. Letter in Granny Herald this morning

    “If Auckland Council is looking for cost savings it should stop running trains after 9pm, as very few people use the late services and it would enable more maintenance work to be carried out on the tracks at night.
    Poorly used bus services, such as in Pukekohe, should also be withdrawn and replaced with an on-demand AT Local Rideshare service instead, which would provide a more appropriate service level at less cost to ratepayers.”

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