A $550M HEADACHE
Job cuts, project delays and reduced services are on the agenda at Auckland Council’s meeting today.
Auckland councillors will earn their $100,000-plus salaries today when they finalise a draft ‘ emergency budget’ that will cut jobs, delay pet projects and reduce services.
Covid-19 has wiped $550 million from the council’s revenue — and councillors face the tough job of plugging the gaping hole.
One councillor likened today’s remote meeting, to be held behind closed doors, to a “horror show”.
By law, the budget must be balanced or thereabouts when it goes out for public consultation tomorrow.
As well as options for the originally planned 3.5 per cent rates increase alongside a 2.5 per increase will be options to balance the books. Some will come as a shock, like cuts to service levels. Think libraries, gyms and community centres.
Hundreds of jobs are potentially on the line and there’s no certainty projects like the $1.4 billion Eastern Busway and Takapuna’s Town Centre upgrade will go ahead.
In a statement to the New Zealand stock exchange last week, Auckland Council said many capital investments will be delayed or slowed down and a sell-off of nonstrategic assets will be ramped up.
‘Tough decisions’
Council chief executive Stephen Town has flagged a wide-ranging review that one source said will lead to hundreds of job losses.
Mayor Phil Goff said Auckland was facing probably the biggest loss of revenue any council has experienced, warning there is no easy way to find half a billion dollars of lost revenue. “We are going to have to take tough decisions. This is an extraordinary, unprecedented situation.
“The bigger the revenue loss is and the smaller the rates rise is, the more services and capital projects would have to be deferred.”
Goff said the first principle on councillors’ minds was to target support to those in most severe hardship and unable to pay their rates, followed by maintaining essential services such as waste, water and urgent repairs, and making progress on capital projects to deal with the city’s problems and provide jobs.
What has been the impact from Covid for council?
All up, said chief financial officer Kevin Ramsay, the council and its five council-controlled organisations will take a $550m revenue hit in the next financial year starting July 1.
Big concerts at Western Springs and Mt Smart will be out, zoo revenue will be down $5m, leisure centres, swimming pools, holiday parks and other community services are forecast to be down $30m. Ports of Auckland and Auckland Airport dividends of $60m each have been cancelled.
Ramsay also pointed to public transport which will see revenue fall by $40m, reduced parking and enforcement revenue will be down $40m and people working from home will reduce the annual regional petrol tax of $150m by $20m.
Last week, Fletcher Challenge predicted residential building consents will shrink by about 30 per cent over the next year. The council is factoring in $50m in lost revenue from consenting and licence work. That flows through to Watercare, which is expecting a $75m shortfall from infrastructure growth charges and other revenue.
What’s being done to shelter ratepayers?
Households and business struggling to pay the last quarterly rates bill this financial year — and the same goes for next year — will be able to postpone payment later than normal without penalties.
However, ratepayers facing hardship still have to pay rates. A sum of $65m has been put aside for rates deferrals next year. “Rates usually end up being collected at some stage. Very, very seldom are they not paid at all,” said Ramsay.