Te Kaunihera o Tāmaki Makaurau / Auckland Council Group’s Annual Report 2021/2022 released today shows that despite the impacts of COVID-19 and economic challenges it faced, the group provided the services that Aucklanders expect and maintained financial resilience.
Mayor Phil Goff said the group has continued to take a prudent and balanced response to financial management while delivering strongly for Aucklanders.
“Despite the uncertainty caused by the COVID-19 pandemic, supply chain issues, the impact of the war on Ukraine and increasing inflation and interest rates, the group has managed its finances responsibly and made strong progress delivering the critical infrastructure, services and facilities that Aucklanders rely on,” he said.
“The Auckland Council Group has received a clean bill of health from the Office of the Auditor-General and credit rating agencies for our financial management.
“The group remains strongly placed to respond to future financial and economic risks while playing its role in creating a world-class city and leaving a stable and sustainable climate for future generations.”
Chair of the council’s Finance and Performance Committee, Cr Desley Simpson, says it is pleasing the group was able to progress some important strategic projects even while facing significant hurdles such as lockdowns, illness, supply chain constraint and rising prices.
“Our annual report shows we’ve been able to deliver $2.28 billion worth of capital investment, and exceed an ambitious target of $90 million in operational savings by $2.7million. This totals the annual savings and efficiencies at $92.7 million, which when added to the savings figures from the past two years, adds up to delivering a final total of savings and efficiencies well in excess of a quarter of a billion dollars this term.”
A positive start to recovery
Auckland Council Chief Executive Jim Stabback says the group’s results reflect strong measures taken to prudently manage the challenges and to make a positive start to recovery in Tāmaki Makaurau.
“The group saw some major achievements this year that will contribute to better outcomes for Aucklanders, including progressing the Central Interceptor project to improve the water quality of Auckland’s beaches, harbours and streams.
“We’ve also seen good progress in the City Rail Link and other transport projects, which will enable more sustainable travel options and as these projects are completed, make it easier, faster and more convenient for people to travel around the city.
“Te Ngau o Horotiu, the new downtown ferry berthing facility is now complete and means that ferry services can operate from bigger and improved infrastructure, designed for growth in usage and the future introduction of electric ferries.
“We’ve completed the first stage of allocating $150 million in funding to be spent over 10 years for Māori outcomes, which included supporting Māori-led active responders assist whānau Māori wellbeing services during COVID-19 Alert Levels 4 and 3. We also carried out the Te Atawhai project at Te Māhurehure Marae for the Marae Infrastructure Programme and the Te Paataka Koorero o Takaanini, the first kaupapa Māori facility.”
Mr Stabback also acknowledged the delivery of local services during a trying year.
“Our local communities are vital to the vibrancy of Auckland. In the past year we successfully delivered 173 out of 192 environmental projects in our local board work programme. We’re continuing to progress community projects from the Mahurangi East Library and Warkworth library renewals in the north, to the development of the new Rangatū Park in the west, and the Pūkaki Crater revegetation planting in the south.
“During COVID-19 restrictions, our library services continued to connect with our communities by offering a contactless ‘click and collect’ service, with over 100,000 items checked out, 150,000 holds placed, and 6,000 'ready to go reads' packs requested.
“We worked hard to protect our natural environment, with the reopening of tracks upgraded to kauri dieback standards and the successful Grow Our Ngāhere programme, with planting of a further 14,800 native trees in areas of heat vulnerability.
“Te Wananga, a new harbourside park, and Kopupaka Playground, an award-winning destination playground in Westgate, have seen us invest in spaces that make Auckland a place where people want to live, work and play.”
Key financials
Auckland Council Group Chief Financial Officer Peter Gudsell says, given the challenges the group faced, it is satisfying that good progress was made on the key capital investment programmes.
“The $2.28 billion we spent on capital investment included $1.1 billion for roads and public transport assets and $815 million for water, wastewater and stormwater infrastructure.
“The group uses debt to help finance capital investment, as this helps spread the cost of the assets across the generations that will benefit from them. The report shows net debt increased by $757 million to $11.1 billion, while total assets increased by $9.3 billion to $70.4 billion.
“Our debt to revenue ratio decreased one percentage point to 257 per cent. This is well below our prudential limit of 290 per cent, and both of our credit rating agencies have reaffirmed our ratings with a stable outlook, with a S&P Global rating of AA and a Moody’s Investor Services rating of Aa2.”
The group’s overall revenue was $5.68 billion, slightly above budget, despite being negatively influenced by COVID-19.
Mr Gudsell says on the positive side, strong development, particularly intensive housing development, saw revenues for the group related to that activity $182 million higher than budget.
"Vested asset revenue was also higher than budget by $132 million.”
Vested assets are those assets transferred to the group from third parties such as developers. These assets are generally roading assets, water infrastructure or parks, which are constructed as part of a residential development. The surplus against budget this year was mainly due to the unanticipated receipt of the Central Post Office renovations from City Rail Link Limited.
“However, some revenues were affected by COVID-19,” says Mr Gudsell.
“The impact of high levels of isolation, illness and caution was reflected in the lower use of public transport, fewer people attending shows and events and unused community facilities and venues for hire.
“This resulted in decreased fees and user charges, which were $199 million less than we budgeted.”
Operating expenditure, which is our cost of delivering services to Aucklanders such as of the cost of collecting rubbish, maintaining our facilities and venues, and supporting our communities, was one per cent higher than budget at $4.73 billion.
Most of the increase on budget related to funding provided to businesses and Aucklanders to revive economic, social and cultural activities in Auckland.
COVID-19 restrictions impacted employee benefits, which were $30 million higher than budget. This was mainly due to paying overtime to ensure physical distancing when carrying out critical water maintenance during COVID-19 restrictions, while higher staff numbers to deliver more services and investments as well as the current tight state of the labour market also impacted staff costs.
Staff numbers increased by 252 full-time equivalents to 11,181, as the group delivered more services and increased the size of its capital programme. Staff were hired to work on critical areas such as climate change and regulatory reform, and additional staff were needed to enable increased regulatory water testing, to support the newly established training centre at Māngere and to handle the operational difficulties from global supply chain challenges that affected the port.
Looking forward
Mr Gudsell says while the annual results are pleasing, there are challenges ahead.
“We have come through a tough period, facing challenges from the COVID-19 pandemic and shifts in the economy. The ongoing impacts are hard to predict, but the prudent management of our finances, and the flexibility we maintained has put us in a good place to weather future storms.
“Our Annual Budget 2022/2023 recognises the effects of continuing economic headwinds such as rising inflation and interest rates and sets out a range of options for maintaining our ongoing financial stability while continuing to deliver services and critical infrastructure to Aucklanders.”
You can read the full Auckland Council Group Annual Report 2021/2022 on the Auckland Council website.
