Goff: Why Auckland needs to hike rates next year

In 2018, Auckland Council’s 10-Year Budget started to make sharp inroads into Auckland’s long-term underfunding of infrastructure. We accelerated investment in cleaning up our waterways and building new infrastructure for housing and transport. In normal circumstances, next year’s update of the 10-year Budget would have aggressively built on that work.

However, Covid-19 has thrown a spanner in the works for Auckland Council — as it has for many Aucklanders and businesses. This year, the impacts of the virus have slashed council income by $450 million and by 2024 income losses will cumulatively be around $1 billion.

Even with these losses, we do not want to make changes that take away from the best things about our city. We do not want an austerity budget that would slash services, stop critical infrastructure projects and worsen the recession rather than stimulate recovery.

We need to keep investing in our communities, our infrastructure, our people and our environment.

But that needs to be done alongside our obligation to manage our finances prudently and responsibly and to live within our means. We have made reductions in staff, constrained salaries and deferred lower-priority projects. This year we are making savings of $120m.

This has been the toughest budget I have worked on. It took months of deliberations and discussions between councillors, consultation with local boards and Independent Ma¯ori Statutory Board members, along with advice and options from council staff.

The key features of my Mayoral Proposal, which will go out for consultation early next year, are as follows:

● Intensifying value for money and savings efforts to lock in permanently $90m

of savings made in this year’s Emergency Budget

● Continuing to sell surplus properties to realise $70m a year for three years, with proceeds to be reinvested in priority infrastructure

● Increasing our debt to revenue borrowing from 270 per cent to a temporarily higher level of up to 290 per cent in the first three years, subject to not impacting negatively on our credit rating

● A long-term commitment to a 3.5 per cent rates increase, with a one-off increase of 5 per cent in the next financial year to help meet the crisis caused by Covid19

● Climate change commitments of $150m to mitigate carbon emissions, including immediately ceasing the purchase of new diesel buses, creating native bush carbon sinks and planning for coastal change.

Without a suite of measures to counter the $1b financial hole caused by Covid, our city will go backwards. We don’t want a city full of potholes and unkempt parks, so we need to take more urgent action now.

While not all Aucklanders will be thrilled with a one-off rates increase of $36, it is a one-off measure that amounts to less than 70 cents a week for the average property. This increase will allow us to do more in transport infrastructure including addressing road safety, further droughtproof our city, accelerate our response to climate change, protect our kauri trees and maintain our parks and sports fields.

We have been catching up on decades of under-investment through our previous 10-year Budget and were making significant progress on our infrastructure deficit. We cannot allow that momentum to be wasted.

The effect of the budget will be to enable additional infrastructure investment in transport, housing, water and the environment of around $900m in the next three years. It will also help with the renewal of key transport, water and community facility assets.

Total capital investment over 10 years will rise from $26b to $31b.

This will stimulate construction, jobs and economic recovery, and help us tackle longer-term critical transport, water, housing and environmental issues.

I acknowledge that this budget will not be all things to all people. Many people would have liked to see us do more — or, conversely, cut more.

However, I believe we have found the right balance between ensuring our city is making the quickest possible recovery from Covid-19 but also recognising that Aucklanders are going through some incredibly tough times.

It is a recovery budget.