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.