Auckland Council’s interim report for the first six months to the end of December 2021 shows that many of the pressures forecast in our recovery budget are materialising.
The results demonstrate that now more than ever, it is crucial that the council continues its prudent approach to financial management and becomes a more efficient and agile organisation.
The interim report shows that the council has balanced its financial priorities in uncertain conditions but will continue to be challenged by the ongoing effects of the COVID-19 pandemic and adverse economic trends such as rising inflation and interest rates.
The interim report reinforces the significant impact that pandemic-related lockdowns and restrictions have had on some key revenue areas, and the disruption this has caused to some of our capital projects.
Lower public transport usage, restrictions on movement, closure of our facilities and venues for hire and reduced earnings from our investments in the airport all impacted cash revenue for the group. This was partly offset by an increase in regulatory revenue from things like increased building consenting and Watercare revenue from infrastructure charges being higher than forecast.
Reduced on-site numbers as a result of social distancing requirements, supply chain challenges and difficulties in finding suitably qualified staff have all disrupted the delivery of our capital programmes. Capital investment was $917 million for the period, a drop of 24 per cent from a year earlier and just 71 per cent of the council’s budgeted capital investment spend of $1,296 million. Despite these challenges we were still able to progress many major water and transport programmes including important projects for our local communities.
Chief Executive Jim Stabback gives some further insight in his CE's message.
The latest financial results are a poignant backdrop for Annual Budget 2022/23 which is open for consultation from today. The budget outlines how the council proposes to navigate continued uncertainty in the next financial year. The Consultation Document outlines the main changes to the budget and work programme for 2022/2023, compared to what was approved in the Recovery Budget (10-year Budget 2021-2031).
The Finance and Performance Committee’s Chair Cr Desley Simpson says, “The interim report is a reminder of our need to continue to carefully provide enough headroom to deal with these highly uncertain times, while investing in Auckland’s future. That’s why this budget proposes using a mix of financial levers to manage risks.
“The decisions we make in this budget are about making the best financial choices that we can to ensure that Auckland has the infrastructure, services and facilities it needs to be a world-class, international city. It carefully weighs this up against the day-to-day needs of Aucklanders such as how rubbish is collected and the transport available in our communities. I urge Aucklanders make their voices heard in this consultation.”
Mayor Phil Goff says revenue ripped out of the council’s budget by COVID-19 over the last two years has had a big impact on the city.
“We have met these challenges so far by strong financial management, finding savings and efficiencies of over $90 million a year, becoming a leaner organisation and selling assets surplus to our needs. We have been able to borrow more within prudential limits. We will take advantage of government funding through their “better off” package. We will be looking to better prioritise our expenditure and get out of activities we don’t need to be in.
“The challenge in front of us is not easy. We will first meet our need to manage our finances responsibly. However, we will also continue to invest heavily for the long term in the infrastructure our city needs to deal with congestion, housing shortages, achieving a resilient water supply, and improving our environment. That includes a strong response to climate change, with the need to respond now and urgently to mitigating global heating, which threatens our children’s future,” the Mayor said.
Our proposed Climate Action Targeted Rate seeks to accelerate our response to the climate emergency.
Councillors have agreed that the overall objectives of this year’s budget are to achieve:
- Faster and further action on climate change
- A resilient and flexible response to the immediate budget pressures
- Efficient waste minimisation.
To address the forecast operating shortfall of $85 million for 2022/2023, and some ongoing budget pressures, the council is proposing using a range of levers including government funding, delaying capital spend and using debt where prudent. Read more about our budget management on OurAuckland.
To achieve our waste minimisation goals, the council is proposing moving to a region-wide rates-funded rubbish collection service with a choice of three bin sizes. This is instead of the current policy of a move to a region-wide Pay As You Throw (PAYT) system (e.g. tags and bags). Read more about our waste policy proposal.
Have your say
Details of all events can be found at akhaveyoursay.nz or you can call us on 09 301 0101.
Feedback forms and supporting information will also be available at local board offices and service centres or can be requested by emailing firstname.lastname@example.org
Following consultation, all feedback will be considered, then the Annual Budget 2022/23 will be adopted in June 2022. Decisions will be widely communicated, and a summary report of the budget will be available online.