Auckland Council is facing some significant financial challenges, requiring some tough choices. We [It, the council] need[s] to overcome a forecast budget shortfall that has grown to $295 million for the 2023/2024 financial year.
— from the Budget Summary [here] [for the truth of this, see below, A Better Budget for Auckland: under the provisions of the law the Council does not have to run a balanced budget]
what’s on the table:
- Maintaining the currently reduced number of public transport services (as of December 2022) for 2023/2024 to save $21 million
- Reducing our [its] funding to Tātaki Auckland Unlimited to save a further $27.5 million, with effects on service delivery (including economic development and tourism promotion) and pricing at venues it manages such as Auckland Zoo, Auckland Art Gallery, and stadiums and venues in Auckland
- Reducing regional services such as community and education programmes, arts and culture programmes, regional events, economic development, and other social services activities such as homelessness funding, community empowerment and funding for youth centres to save $20 million
- Reducing local board funded activities across all boards to save $16 million
- Reducing regional contestable grants to save $3 million
- No longer directly providing early childhood education services to save $1 million.
…the approach is:
We [It] need[s] to balance the budget and have [has] limited options available to us to achieve that in the next financial year.
The proposed budget package for 2023/2024 includes:
• Reducing our [its] operating costs by an additional $125 million across Auckland Council and Council Controlled Organisations. This would impact some services we [it] currently deliver[s].
• A rates package that would see a total rates increase for the average value residential property of around 4.66 per cent or $154 a year (around $3 a week)
• Selling our [its] shareholding in Auckland International Airport (currently around 18% of the Airport’s shares) to reduce our [Council] borrowing
• Borrowing no more than $75 million of additional debt, so that we [Council] can cope with any future financial uncertainty (current policy allows us [Council] to further borrow up to $140 million).
[Council’s] Our budget still allows for a wide range of crucial everyday services to be provided for Aucklanders, as well as $2.8 billion of capital investment in the likes of transport assets, parks and community facilities, city centre and local developments, urban regeneration and cultural development, and environmental management. We [It] might need to bring forward some asset-renewal spending for storm-damaged assets, and we [Council] can do this by reprioritising and delaying some of this new capital investment.
From 2023/2024, we [it] are [is] also proposing to spend around $20 million more each year to reduce the impact of future storms. This would likely require rates to increase for 2023/2024 by around an additional 1 per cent (on top of the 4.66 per cent increase proposed to address our budget shortfall).
By proposing a mix of options to balance the budget, we [Council] believe[s] we have a credible plan that sets us on the path to be a simple, efficient, and serviced-based organisation.
Following public feedback, if this proposed budget package is not supported or if our [Council’s] financial challenge worsens, we would need to make up the shortfall another way. The alternatives are likely to be limited to:
• increasing general rates by up to 13.5 per cent, or a total increase of $336 annually for the average value residential property (around $6.50 per week)
• increasing debt further, within the limits of our [Council’s] prudential borrowing policy.
We [Council] have [has] some tough choices ahead, so please share your thoughts through this consultation on what you think of the proposals.
— from the Budget Summary [here]
My personal view is that support of regional services, regional contestable grants, local board funding and the provision of early childhood services, as well as all the services and areas of public and social funding slated for cuts should be regarded as Fixed Costs.
These costs are internal and integral to running the city.
Auckland Council ought to have the political will to economic courage. Council ought to require the cost of running the city be met, not by increasing its internal indebtedness and raising already punitive costs to citizens in rates, but externally, at the national level.
also, the business model would indicate one of two things: either Auckland Council is undercapitalised to meet future commitments, including service delivery, addressing failing infrastructure and climate change commitments; or it’s a bust. Given Council’s assets, it shouldn’t be too difficult to raise the capital to meet its longterm operating costs.
… “the Council does not have to run a ‘balanced budget’. The law says councils have a Balanced budget requirement but that they only have to ‘balance the books’” …
… “Council says that it cannot borrow more than $140m without breaching internal policy, but as the Council these policies can be adjusted” …
“Auckland Council should be investing now – in tourism, public transport, the arts, and other social services. Investing in the city will bring revenue back.” … “Cutting and selling are no way to bring Auckland back” …
A Better Budget proposal:
Unfreeze targeted rates $50.9m
Existing Council rates package $93.2m
Extend borrowing $150.9m
TOTAL: Alternative Budget Revenues $295.0m
>>make your opinion known by having your say here.
>>>refresh your memory on Mark Blyth’s economic views below because austerity has never worked anywhere<<<
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