Challenges facing Phil Goff: Bernard Orsman and Tim McCready report
You’ve got to feel for Phil Goff. A second term as Mayor of the Super City in the bag, a more settled council and 2021 to look forward to. This year was meant to be Auckland’s year.
The America’s Cup over summer followed by the Apec leaders conference. Lots of fun and showcasing Auckland to the world.
Then, in quick succession, a blaze at SkyCity Convention Centre put paid to Apec, the city suffered a severe drought and Covid-19 created a $1 billion hole in the city’s finances.
“We are ending 2020 on a very different note to where we started,” Goff said in December at the launch of his “Mayoral Proposal” for the new 10-year budget.
When the initial Covid cases were reported in March last year, Goff was among the first people to roll up their sleeves at Spark Arena to help with emergency food parcels for thousands of households going hungry.
Come May and it was the turn of Auckland Council to feel the pain of the pandemic. Finance officers reported Covid-19 had wiped $450 million from Council’s revenue, much of that non-rates revenue.
This was followed by more bad news in November. The revenue hole was going to grow to $1b by 2024.
The “horror show”, as one councillor put it, forced the mayor, councillors and council executives to reduce spending and service levels, cut hundreds of jobs and reset budgets.
Auckland may have weathered Covid better than most international cities, but the invisible enemy is still calling the shots.
Despite the difficulties, Goff is not planning to take an austerity path for Auckland’s Recovery Budget. Quite the opposite. His plan is to maintain essential services and high levels of spending on infrastructure, knowing full well it will never be enough to address decades of under-investment and rapid growth.
With 2021 under way, here’s some of the big challenges facing Goff and councillors, in no particular order.
Water
Starting with the drought, it stopped raining for 78 days last summer and the city’s dams plummeted to less than half full.
Watercare was caught short, having failed to boost the city’s water supply and found itself well down the queue to obtain consent to draw more water from the Waikato River when the city desperately needed it.
As one insider put it: “It’s not a water crisis. It’s a management crisis.”
Water restrictions were introduced and Watercare splashed out $224m of unbudgeted expenditure on a drought response.
Those shorter showers, some much needed rain and a bit of extra water from the Waikato helped save the day — for now.
Water remains a political football. Borrowing limits led the board of Watercare to propose doubling water bills in less than a decade to pay for “major infrastructure investment”, although Goff stopped double-digit annual price hikes, telling chair Margaret Devlin they would not be acceptable. The board opted for the lower increase.
The ability of Watercare to boost its coffers by billions of dollars over the next decade rankles with Auckland Transport, which only gets a miserly extra $300m.
The other issue on the horizon is the Government’s Three Waters reform programme that could see a handful of “public multi-regional water entities” established to manage the country’s water supply, wastewater and stormwater assets.
The proposal could see Watercare take over the supply and distribution of water in Northland.
Goff has no plans to hand over the ownership of Watercare and is strongly opposed to Aucklanders subsidising water assets in other regions.
Watercare has long been lobbying for Three Waters reform and would love to be freed from the shackles of Auckland Council, but in Goff they have a very skilled politician determined to maintain public ownership and a degree of control over the water business.
Finance
If there’s one thing that keeps Phil Goff awake at night, it’s the financial straitjacket holding Auckland back.
The council simply doesn’t have enough money; ratepayers won’t tolerate big rate rises, the Government is loathe to hand back GST on rates (a tax on a tax) and coronavirus has blown a $1b hole in the budget.
To make matters worse, Auckland Council is right up against its debt ceiling and the council has very little capacity to borrow more money without risking a downgrade to its cherished AA rating.
In order to maintain essential services and high levels of spending on infrastructure, Goff is proposing four measures in his 10-year budget — locking in $90m of savings in this year’s emergency budget over the coming years, increasing the sale of property sales by $70m over the next three years, raising council’s debt to revenue ceiling from 270 per cent to 290 per cent for three years, and raising rates.
Unlike the whopping 14 per cent rates rise being proposed in Wellington — the city of burst pipes — Goff is proposing a 5 per cent rates rise this year and 3.5 per cent thereafter. This may sound reasonable, but Goff had a job selling a 3.5 per cent rates rise in this year’s emergency budget after several years of a 2.5 per cent rises; what the politician in Goff refers to as “avoiding unreasonable pressure on ratepayers”.
He has also opted to extend the two targeted rates to improve water quality and the natural environment by three years, which makes sense in these constrained times.
A big headache this year is the renewal budget for community facilities, with the dire prediction of an $800 million shortfall over the next 10 years following years of neglect, leading to the suggestion that some facilities will have to be closed or sold. This will involve some tough decisions at the Local Board level, although the sales proceeds could be used to fund shiny new assets.
The Auckland Art Gallery is a good example of a city asset that has not been properly maintained.
The original 1887 building needs expensive repairs to the roof, windows and paintwork costing many millions of dollars.
Transport and infrastructure
Anyone who has driven through Kumeu recently will know that Auckland’s infrastructure is not up to the job.
Houses are springing up all over Northwest Auckland, Auckland Transport and the NZ Transport Agency have failed to provide the necessary roading and public transport and locals are driven to despair.
It can take more than an hour to drive the short distance from Kumeu to SH16 at Brigham Creek.
It’s the same across Auckland. Population growth is fuelling the housing crisis and when housing is built, transport and other infrastructure lags behind.
There are some bright spots. Sean Sweeney and the Link Alliance consortium of seven companies are making good progress on the $4.4b City Rail Link, Watercare’s monster $1.2b sewer pipeline is under way and the $1.4b Eastern Busway is rolling along to give car-locked suburbs like Pakuranga and Howick an express bus service similar to the Northern Busway.
The big issue facing the players is funding. Goff has less money to spend, although a 5 per cent rates increase allows for an extra $550m to be spent on transport over the next three years.
Spending on the CRL is about to peak and along with the Eastern Busway is chewing up about 20 per cent of capital budget for the entire council group.
Big challenges also lie ahead for the Government’s upgrade programme for Auckland transport, including more uncertainty over the $120m SkyPath build and hundreds of homes and businesses in the path of the $1.4b Mill Rd highway. At long last, work has started on electrifying rail from Papakura to Pukekohe, building on the work former Auckland Regional chairman Mike Lee achieved to electrify and double track the city’s commuter network.
Auckland is also awaiting word from the Government on light rail, which Finance Minister Grant Robertson and Transport Minister Michael Wood have said is not far off.
The ministers have said Labour is absolutely committed to light rail, but so far no-one, including Jacinda Ardern, Robertson and Goff have put up their hand to be a champion for the project in the way former Auckland Mayor Len Brown did on the CRL and got over the line.
Goff is certainly not interested in putting his neck on the line and is leaving light rail to the Government to deliver.
After light rail was blocked by NZ First last year, leader Winston Peters said it would cost between $10b and $15b and lead to a “decade of chaos”.
What with disruption from the City Rail Link, orange cones blocking routes all round the city, plastic sticks and concrete blocks messing up Queen St and the potential for further lockdowns, a decade of chaos from light rail is the last thing Aucklanders want right now.
Where the council is getting unstuck, is around plans to ban cars and green Queen St at a time when the city’s premier street is an ugly mess, shops are closing, overseas students and tourists are non-existent, and businesses are struggling in the face of Covid.