Auckland Council is currently consulting on what is one of its most important ever Annual Plans – the ‘budget’ of what it will spend money on between July 1 this year and June 30 next year, and the level of rates and other charges to fund this investment. There’s a lot of money at stake, with the Council family (including its Council Controlled Organisations like Auckland Transport) planning to spend $3.593 billion in operating costs and $2.791 billion on capital investment.
The context for the annual budget is more challenging than ever. Not only is the Council still recovering from the impacts of Covid-19 on various revenue streams like public transport fares, but there is decades-high inflation rates, the impact of massive recent storms and a $1 billion increase in the cost of the City Rail Link – for which under current arrangements the Council is up for half of. This was always going to be a really tough and complicated budget to get right and unlike Central Government, Auckland Council can’t just run a massive deficit when times get tough – they legally have to balance their budget.
In this context, the main proposals of the budget are:
- Cutting operating expenditure by $125 million, which seems to have significant potential effects on many services the council provides right across Auckland. From a transport perspective, it means we’re stuck with continuing to run the current number of bus services, even though that’s a massive cut on what we used to run due to the bus driver shortage.
- A 4.66% overall rates increase, which is well below current inflation levels of 7%. This means in effect a ‘real’ rates reduction of over 2%. By way of comparison, throughout most of the past decade or so, rates increases have generally been 1-3% above inflation, allowing the region to slowly make improvements over time.
- Selling the Council’s ownership of Auckland Airport shares, which will bring in around $1.9 billion and help reduce debt repayments.
- A slight increase in debt levels.
The consultation document also gives some level of flexibility, including higher rates increases and a greater use of debt, should those options be supported through public consultation.
This is how the overall expenditure breaks down across key areas:
There’s quite detailed information about what Auckland Transport will focus on, including a list of their capital projects as well as an explanation of what cost savings they will be pursuing.
Most attention has been paid to some of the potential impacts of the budget on various community services the council provides, especially through funding provided by Local Boards. And it does seem like some of these cuts could be pretty devastating, even though they don’t really save that much money in the scheme of things. Some of the ‘nastier’ cuts include:
- Cuts to regional events, arts & culture programmes, educational services, Citizens Advice Bureaus, the highly successful Southern Initiative programme and climate action programmes
- Cuts to regional contestable community grants
- Reduction in local board funding
- No improvement to bus, train or ferry services (aside from some new services when the northwest bus improvements open later in the year)
- A reduction in opening hours, or higher entry prices, for major facilities like the Zoo, Art Gallery etc.
- A slowdown of urban regeneration activities across Auckland
I think the thing that’s frustrating about this budget is how quickly it jumps to some pretty horrible gutting of services that add immense value to the city, while leaving other potential areas untouched for seemingly no good reason. I wouldn’t think that it’s too hard to avoid almost all of the nastier cuts proposed in this budget, through a combination of:
- Revenue increases in areas like parking and enforcement, where Auckland Transport has continued to be completely useless in recent years. Why should public transport fares increase when some parking rates haven’t been changed for over five years?
- A ‘real’ rates increase that’s similar to what we’ve had for most of the past 12 years – a couple of percentage points above inflation keep up the real value of Council’s income and allow the city to slowly make progress. This means something like 8-9% overall rates increase, rather than the proposed 4.66%. This change alone would probably avoid the need for most of the nasty cuts proposed in Council’s budget.
- Selling some of the golf courses Council owns. According to this Spinoff article, Auckland Council owns nearly $3 billion worth of golf courses (mostly their land value, presumably). There seems no sensible reason for the council to continue owning this land, especially when some of the golf courses it owns (A.F. Thomas Park near Smales Farm and Chamberlain Park in Mt Albert) are right next to existing or planned rapid transit stations and would make for incredible transit-oriented developments.
The Council’s consultation document leaves the door open for different approaches to what has been put forward in the draft Budget. Most notably, it entertains Council having slightly higher debt levels, as well as general rates increases of up to 13.5%. One of the main reasons the document has done it, is to give the council flexibility to respond to submissions. So get those submissions in before the 28th!