The impact of Omicron in the region increased the pressure on Auckland Council’s operations and finances, as reflected in the council’s financial results for the nine months to the end of March 2022.
Auckland started the third quarter of its financial year in the orange setting of the COVID-19 Protection Framework, but the emergence of the Omicron variant saw a move back to the red setting for the region. The resulting restrictions and high levels of isolation and illness resulted in lower use of the council’s facilities and public transport, which in turn impacted revenues. In addition, the COVID-19 restrictions and illnesses affected almost all capital works.
Finance and Performance Committee Chair, Councillor Desley Simpson says the latest results show the need for the council to continue to carefully manage its finances through challenging times.
“Having planned for unfavourable impacts from COVID-19 and deteriorating economic conditions, we’ve been able to respond to both financial and operational challenges, to make the most of our available resources for the benefit of Aucklanders.
“We are on track to make our $90 million Recovery Budget savings target this financial year, having achieved $83.5 million, or 93 per cent to date.
“We’ve also seen some positives in the council’s results this quarter, with record regional park visits and stable customer satisfaction across many of our services, although there are areas we know that we need to do better in, such as improving resource consent timeframes in regulatory services.”
On top of the effects of the COVID-19 pandemic in the first six months of the financial year, the emergence of Omicron resulted in a significant impact on council’s ability to progress capital works. Capital spend was $1.481 billion for the nine months to the end of March, which was down $250 million on the same period last year, and 74 per cent of the $2 billion budget for the period.
The largest underspends were on the Central Interceptor project, the Huia 1 and Nihotupu watermain upgrades, Matakana link road project and the Huapai Improvement project.
Auckland Council Group Chief Financial Officer, Peter Gudsell says while the council did face delays, progress was nevertheless made on many projects, albeit at a slower pace than budgeted.
“The council group’s direct revenue was in line with budget, despite the impact from the pandemic and areas such as public transport, parking and enforcement being significantly below budget.
“The strength in the construction sector offset these negative impacts by bolstering our infrastructure growth charges and regulatory revenue.”
Group direct operating expenditure was $81 million below budget, mainly driven by work programme delays, reduced costs associated with cancelled or postponed events and reductions in repairs and maintenance requirements.
The council’s net debt increased by $227 million for the nine months to end of March versus the year-earlier period, reflecting the investment in capital works. This was $1 billion less than budgeted, and debt remains at prudent levels and consistent with our strong AA/Aa2 credit ratings from S&P Global and Moody’s respectively.
Read the full Quarterly Performance report at infocouncil.govt.nz.