Wednesday, May 22, 2024

Auckland Council plan to address $295 million budget shortfall

Auckland Council’s Governing Body has adopted the Consultation Document for Annual Budget 2023/24, with the proposed budget aiming to address an estimated budget shortfall of $295 million.

Public feedback on the document will open from midday on 28 February and close at 11pm on 28 March.

Auckland Council Chief Executive, Jim Stabback said it was important the Council hears from Aucklanders on the proposals that have been put forward.

“Auckland Council is facing some significant financial challenges in the next financial year and we need to balance our budget,” he said.

“The forecast $295 million shortfall is in part due to an expansion in the range of services and assets provided by council over successive decades. This has required more money to invest in, maintain and operate those assets and services. The situation has been worsened by the rapid jump in interest rates and inflation over the past year.”

“The recent severe weather events that have hit our region makes dealing with the financial situation an even more significant challenge.”

Auckland Council Group Chief Financial Officer, Peter Gudsell said that to respond effectively to the challenges ahead, the budget outlines immediate actions to cut spending, while also looking at the changes needed to become a simplified and service-oriented organisation.

“Some of these changes are already underway. We are actively progressing savings of $40 million across the group in areas like simplifying management portfolios and structures, improving the efficiency of our processes, reducing internal back office budgets, implementing group shared services, and consolidating strategy and policy activity,” he said.

“It’s important now more than ever to look at how we can carefully balance the budget while focusing on the services that matter for Aucklanders, and providing those services in the most effective and efficient ways.

“We have some tough choices ahead and I encourage all Aucklanders to participate in the consultation to ensure their priorities are heard and reflected in our annual budget.”

Aucklanders are invited to have their say on the proposed mix of options to close the budget shortfall. These include:

  • Reducing operating costs by an additional $125 million across Auckland Council and Council Controlled Organisations. Council says this would impact some services such as regional services and contestable grants, local board funded activities, and services delivered by Tātaki Auckland Unlimited.
  • A rates package that would see a total rates increase for the average value residential property of around 4.66% or $154 a year (around $3 a week).
  • Selling Council’s shareholding in Auckland International Airport (currently around 18% of the Airport’s shares) to reduce borrowing.
  • Borrowing no more than $75 million of additional debt, to cope with any future financial uncertainty (current policy allows Council to further borrow up to $140 million). 

“The proposed 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,” says Mr Gudsell.

“We may need to bring forward some asset-renewal spending for storm-damaged assets, and we can do this by reprioritising and delaying some of this new capital investment.”

Additionally, from 2023/2024, the Council are proposing to increase its operating budgets by around $20 million each year to improve its ability to prepare for and respond to future storms.

This would likely require rates to increase for 2023/2024 by around an additional 1% – on top of the 4.66% increase proposed to address the budget shortfall.

Following public feedback, if this proposed budget package is not supported or if our financial challenge worsens, we would need to make up the shortfall another way, Council said in a statement.

The alternatives are likely to be limited to:

  • increasing general rates by up to 13.5%, 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 prudential borrowing policy.

“It’s important that the budget choices we make are credible, sustainable and avoid unreasonable shocks for Aucklanders both now and in the future,” said Mr Gudsell.

Have your say

Feedback can be provided online, via email, by phone, post and at Have Your Say events so Aucklanders are encouraged to get involved and make their voices heard.

Visit between 28 February and 28 March to find out more and have your say. 

Final decisions will be made in June 2023 and the final budget will be available on the Auckland Council website.

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