Wayne Brown's budget is looking to patch a $295m hole in the council's books caused by high interest rates, inflation and reduced income due to economic conditions
Auckland Mayor Wayne Brown is proposing a general rates rise by 7 percent next year and that his predecessor's special water and environment rates be reduced by two-thirds, as part of a cost-cutting budget.
Public transport fares would rise by an average of 6.5 percent as part of Auckland Transport's contribution to helping the council's finances and the number of transport services would remain at current levels, that are reduced due to driver shortages, until mid 2024.
And the council's Auckland Airport shares would be sold, ending city ownership of part of the nation's gateway.
Brown's budget proposal, to go before the full Auckland Council on Thursday morning, looks to patch a $295m hole in the council's books caused by high interest rates, inflation and reduced income due to economic conditions.
He wants to start consultation on selling the council's $1.9 billion shareholding in Auckland Airport - which he says would be used to pay off debt and thus save $88m a year in interest payments - and to cut $130m next year in the council group (including council controlled organisations) costs, of which $60m would be from the council itself.
The council's other big corporate asset, Ports of Auckland Ltd, would have to commit under this budget plan to improve profitability and make a dividend payment next financial year of $10m more than the $21m currently envisaged.
Without his range of cuts in costs and increases in rates and fees, Brown says rates would have to rise by 13 percent next year. "Aucklanders are living through the worst cost-of-living increases in decades, and I don't believe council should be adding to this burden with a rates rise of over 13 percent," he said.
To achieve an 'average household rate increase' of 4.6 percent, there would be a general rate rise of 7 percent but that would be offset by a plan to "pause" a long-term differential strategy which has been reducing rates paid by businesses at the expense of households, and also a cut to how much ratepayers would be charged for water and environment rates.
Former mayor Phil Goff introduced the two targeted rates in his second term to ensure Auckland invested over the next decade to boost the natural environment and improve water quality. Brown says those goals could still be met for next year from reserves of money raised already by those special rates but so far unspent.
Ratepayers will be asked to pay 10 percent more for their targeted rubbish rate.
On the overall rating increases, Brown said: "We need to increase our general rates to strengthen council’s revenue base. The impacts of inflation and interest rates are compounding. This means it is more expensive to deliver our services and if we do not respond to these factors with a rates increase, there will be a reduction in the services we deliver. Doing nothing will increase the likelihood of large rate shocks in the future."
The 7 percent general rates increase is double the 3.5 percent level forecast in the council's 10-year long-term plan.
Auckland's 21 local boards would face a $16m cut in funding - or 5 percent. After briefings on the proposal, 11 boards opposed the cut, with several advising councillors a 5 percent cut actually equates to a 50 percent cut in their 'locally driven initiatives budget'. Two of the boards, Māngere-Ōtāhuhu and Ōtara-Papatoetoe, say cuts mean they will be unable to discharge their responsibilities.
Brown also wants to cut the economic development and tourism agency, Tatāki Auckland Unlimited, by $27.5 million (more than from the much bigger Auckland Transport, which faces $25m in operating cuts).
The Auckland Unlimited cuts will mean public money spent to attract tourists to the city, or to help stage and promote large sports and cultural events will fall substantially. He warns of "some implications for service delivery and pricing via the Zoo, Art Gallery, stadiums and venues and some reductions in events and economic development activity".
Brown will ask his razor gang committee, chaired by new councillor and former National Party cabinet minister Maurice Williamson, to find another $7.5m in cuts from Auckland Transport and $5m from the council organisation. "A key focus area for savings should be in management and reducing the number of strategies, policies and plans."
Parks and open spaces in the city might not look quite as well maintained either, with "minor reductions to open space levels of service delivered through the parks and community facilities full facility maintenance contracts". Local boards in Henderson-Massey and Papakura have already warned a reduction in frequency of bin collections could lead to vandalism and antisocial behaviour.
As telegraphed, the proposed budget would see the council withdraw from its early childhood education centres, for a saving of just $1m of general rates funding.
The detail of Brown's proposal includes steep specific rises for some activities or for some non-profit groups currently using council facilities.
For example, the fee for hiring an Auckland Tepid Baths teaching pool would rise by 350 percent - from $22.30 to $100.
Hiring a lap pool at Lloyd Elsmore Park and Glenfield swimming facilities would be up by 107 and 176 percent to $200 a time.
Cremation fees at council-run cemeteries would rise by 15 percent to $750 and minimum charges for a burial plot will jump 30 percent to $2900.
Sports and other non-profit community organisations occupying council facilities at a nominal fee will face large rises - small buildings will cost $2500 instead of $250 for "a building maintenance fee" and bigger facilities would go from $500 to $5000 and $1,000 to $10,000.
All of the organisations using such facilities would see their administration fee rise from $1 to $1300.
Depending on the proposed budget's reception by Auckland councillors on Thursday, measures would be prepared for public consultation and then final votes by around June next year to apply for the July 1 2023-June 30 2024 financial year.
Brown said: "There is significant economic uncertainty at the moment and there is a possibility that our financial challenge may change. We will need to be clear in consulting with Aucklanders that we may need to use certain tools or levers more or less when making final budget decisions."
*This article has been updated to make clear the natural environment and water quality targeted rates will be cut by two-thirds next year, not suspended.
