Auckland Council Group’s interim report for the first six months to the end of December 2022 shows positive signs of recovery from the effects of the COVID-19 pandemic restrictions and the challenges that it brought.
However, the results showing pressure on costs reinforce how crucial it is for the council to continue its focus on the services that matter to Aucklanders, while also looking at the changes we need to make to become a simplified and service-oriented organisation.
Auckland Council Chief Executive, Jim Stabback says while the financial results for group are much healthier than the prior year’s, there is no doubt that financial pressures are growing.
“While we are seeing recoveries in revenue in areas like public transport usage, facilities and venues usage and parking and enforcement fees; there continues to be pressure on our finances from higher interest costs, pressure on wage and salary expenses, and increases in the cost of goods and services for the council.
“The devastating and tragic weather events that hit Tāmaki Makaurau from 27 January make overcoming the financial situation even harder.
“We know many Aucklanders have been severely affected by the storm, flooding and slips, and our immediate priority is to keep Aucklanders safe. It will take some time to determine the exact impact and costs of the weather events.”
Auckland Council Group Chief Financial Officer, Peter Gudsell says the reopening of the city from lockdowns increased both revenue and expenses.
“Total revenues for the group lifted $444 million to $4.3 billion compared to the previous year’s reporting period, with fees and user charges in particular bouncing back from the first half of 2021/2022.
“Ports of Auckland Limited also saw revenue increases of $29 million from higher container rates, and the increase in events activity saw Tātaki Auckland Unlimited’s revenue increase by $19 million. Auckland Transport revenues increased by $23 million from a rise in patronage and increased use of parking.
“Of course, the move away from COVID-19 restrictions also led to higher expenses. Total operating expenses lifted $302 million to $2.6 billion compared to the previous year’s reporting period. Repairs and maintenance increased $42 million against the prior year, when a substantial amount of this work was paused or not required.”
Overall, the group’s operating surplus before gains and losses increased by $142 million to $1.7 billion.
“Capital projects also benefitted from the lack of restrictions, although there continue to be constraints on the availability of resources” says Mr Gudsell.
“The group delivered $1.2 billion of capital investment, building community assets and supporting the infrastructure Aucklanders need. This was a 33 per cent rise on the same period a year ago.
“This included the completion of the Eastern Busway between Panmure and Pakuranga, completion of the Hunua 4 water pipeline that adds resilience to the region’s drinking water system, and completing the tunnel boring under the Manukau Harbour for the Central Interceptor Project.”
You can view the full Auckland Council Group Interim Report 31 December 2022 on the Auckland Council website.
Key results
Revenue
- Total revenues for the group lifted $444 million to $4.3 billion compared to the previous reporting period.
- Fees and user charges were $610 million, up $134 million from a year earlier. This included water and wastewater revenues up $43 million due to the lifting of lockdown, a rebound from prior-year drought water restrictions and price increases.
- The group’s revenue was supported by the $81 million of Three Waters Reform Better Off Support funding from the central government and $48 million from Waka Kotahi NZ Transport Agency to top up public transport and half-price fare funding to mitigate the impacts of COVID-19.
- Ports of Auckland Limited saw revenue increases of $29 million from higher container handling rates, and an increase in demurrage and storage.
- The opening-up of events activity increased Tātaki Auckland Unlimited’s revenue by $19 million and Auckland Transport revenues from user charges increased by $23 million from a rise in patronage and the use of parking.
- Development and financial contributions also rose, up $28 million to $103 million as economic activity increased after lockdowns.
Operating expenditure
- Total operating expenses lifted $302 million to $2.6 billion compared to the previous reporting period.
- In addition to depreciation from new assets, most categories of infrastructure assets had very large valuation increases at the end of the 2021/2022 financial year which resulted in $110 million more depreciation in this period.
- Public transport costs increased by $53 million with higher patronage and more kilometres travelled by rail.
- Repairs and maintenance increased $42 million against the prior year, when a substantial amount of this work was paused or not required.
- The group’s total employee benefit costs were $34 million higher at $557 million due in part to a 5 percent rise in average wage and salary rates for existing employees, the filling of prior-year vacancies, increasing salary rates for new employees in the tight labour market as well as the costs of temporary staff brought in to cover vacancies due to COVID-19 restrictions and illness.
- Overall, the group’s operating surplus before gains and losses increased by $142 million.
Capital expenditure
- The group delivered $1.2 billion of capital investment, a 33 per cent rise on the same period a year ago.
- Some major projects completed or progressed include:
- The completion of the Eastern Busway between Panmure and Pakuranga
- Completion of the Hunua 4 water pipeline, which adds resilience to the region’s drinking water system
- Achieving a major milestone on the Central Interceptor Project, with the tunnel boring under the Manukau Harbour complete
- Completing a renewal of Mt Smart Stadium’s athletics tracks.
Debt
- Investment in these projects lifted our debt, however our debt was kept well within prudential limits.
- Net debt (after cash and cash equivalents) increased by $312 million to $11.4 billion.
- Debt to revenue was 248 per cent at balance date, while net debt to total assets was 16 per cent.
