At yesterday’s Budget Committee workshop, Mayor Wayne Brown unveiled a revised mayoral proposal for the Long-term Plan (10-year Budget) 2024-34. This includes a reimagined bid to establish an Auckland Future Fund, initially capitalised using the council’s remaining shares in Auckland International Airport Ltd (AIAL).
“My new proposal would see the Auckland Future Fund established faster, without the port lease, creating a potential windfall gain of around $20 million next year. I’m proposing that this money be channelled into a reserve fund to fix and finish community projects for legacy councils that didn’t sell their airport shares before merging into a single Super City."
Higher returns
“An Auckland Future Fund would be well-capitalised with the airport shares alone, valued at around $1.3 billion. This option has the strongest support from the public. In the future, we could consider other contributions to grow the fund, says Mayor Brown.
“At this stage, I do not propose using the fund for self-insurance, which only complicates things. The council will retain an existing self-insurance fund and look to improve it.
“Establishing an Auckland Future Fund would enable us to swap a single asset, the shares in the airport, for a diversified asset portfolio that can be expected to provide a higher and steadier rate of return, as well as being more resilient to shocks that impact the council’s other assets.”
Based on independent advice, the fund’s cash contribution to Auckland Council is expected to be $400 million more than its dividends from AIAL shares over the next 10 years. This will be a 2.2% annual savings for each ratepayer.
Impact on households
The revised mayoral proposal outlines a rates increase for the average Auckland residential property of 6.8% in FY25, 5.8% in FY26, and 7.9% in FY27. And, beyond that, an average rates increase of no more than 3.5% for the rest of the Long-term Plan 2024-34.
“I’ve proposed the lowest rates increase of any metropolitan council in New Zealand. It’s less than half the national average, and this year’s rates bill will be even lower than what I originally consulted on.”
Water charges will also be significantly lower than projected, with an increase of 7.2% rather than 25.8%. This is a direct result of the new operating model for Watercare that the Mayor negotiated with central government.
Under the Mayor’s final proposal, the average Auckland household will pay an extra $6.38 per week in rates and water charges, compared to $11.79 under the original proposal.
To ensure that the council remains on a path of financial sustainability, and in line with his priority to stop wasteful spending, Mayor Brown has also proposed that the council group find additional savings of $141.8 million over the next three years. This is on top of the $83 million savings found in last year’s annual budget.
We are responding to what our communities are telling us, that people are hurting financially. We can help ease the pain by keeping rates as low as possible,” says Mayor Brown.
Fix-and-finish funding
The Mayor is proposing to set aside increased returns from an Auckland Future Fund in year-one, estimated at $20 million, to fix and finish important community projects, focusing on legacy Manukau City and Auckland City areas.
Auckland Council inherited its AIAL shares from these two amalgamating councils. The other five legacy councils had already sold their interests in the airport.
“It’s been pointed out that some areas of Auckland have already benefitted from the sale of airport shares by legacy councils. Also, some local boards have benefitted more than others from the asset-based funding model put in place since amalgamation. My proposal will redress this imbalance,” says Mayor Brown.
The clear purpose of the Auckland Future Fund will be to protect its real value for future generations and provide strong returns. Professional investment managers would be appointed to administer the fund, guided by clear investment policy objectives.
Stricter protections
The revised Auckland Future Fund proposal outlines stricter protections to ensure that it cannot be raided for short-term gain.
“An Auckland Future Fund would be established as an unincorporated non-charitable trust, which can provide a very high level of protection against divestment. I also want us to seek the added protection of legislation,” says Mayor Brown.
A local bill has been drafted, with further steps to be taken once the Auckland Future Fund proposal is passed.
The final mayoral proposal will be considered by the Budget Committee for endorsement to and adoption by the Governing Body on May 16.
Please see this document for more information on the Mayoral LTP Proposal.
