Profit up but grim outlook for city
Auckland Council’s finances have perked up, with its operating surplus up by $142 million, but the improvement hasn’t cleared the storm clouds hanging over the grim budget currently being prepared.
The council’s half-year report shows revenue up by $444m compared with 12 months earlier, while costs rose by a smaller $302m.
However, the council has warned that the improvement was bolstered by one-offs such as the $81m from the government for the Three Water Reforms, and $48m of extra government money for public transport.
On the plus side, the revenue was also driven by fee and user charge income, up $134m on the previous year; and $29m of higher revenue for Ports of Auckland.
Costs were boosted by a $34m higher wage bill, and public transport costs, which were up $53m.
Headwinds have since increased, with the weather emergencies likely to hit the finances for the second six months through to July, and the forecast remains for a $295m deficit needing to be closed in next year’s budget, which has just begun public consultation.
‘‘The devastating and tragic storm and cyclone that hit Ta¯maki Makaurau from January 23 have taken the challenge of the group’s financial situation even further,’’ mayor Wayne Brown said. ‘‘It is too early to know the exact costs of these events, but they will add additional costs in the second half of the financial year.’’
Council chief executive Jim Stabback, who will leave the role in six months, said there was no doubt that the financial pressure on the council’s books was growing.
‘‘This was evident in higher interest costs related to unhedged debt, the pressure on wage and salary expenses and increases in the cost of goods and services,’’ Stabback said.
The mix of budget proposals for next year include a 4.6% average rates rise, cost cuts of $130m, and a possible sale of all or part of the council’s airport shareholding worth $2 billion.