Financial implications of severe weather events

Publish Date : 09 Feb 2023

As with any sudden or unexpected large-scale weather event, Auckland Council expects there to be financial implications from the severe weather events that have hit Tāmaki Makaurau over the last fortnight.

It will take some time to fully work out the costs associated with these events but will include spending to support the flood response and recovery work, and to repair or renew some assets the council owns and manages, says Peter Gudsell, Auckland Council’s Group Chief Financial Officer.

“While we cannot yet calculate the costs associated with the floods, we understand the nature of the costs we are facing,” he says.

These costs could be substantial over time. Some of the types of costs the council will be assessing over the next few weeks and months include:

  • Emergency management activities, building inspection costs, damage assessment of council property and infrastructure, clean-up, and repair costs.
  • Capital expenditure likely to be required to renew damaged assets that we manage and own.
  • Providing for some free disposal of storm-related waste and free boarding and registration for pets at the council’s animal shelters will also come with a financial cost.
  • Any increase in the use of existing rates remission or postponement schemes by impacted property owners.
  • Revenue reduction from storm damaged council-owned facilities such as the Zoo and other community facilities.
  • Disruptions to the public transport network and the waiving of transport infringement notices over the flooding period could have a modest short-term revenue impact.
“We believe that there is enough flexibility in our borrowing limit to support managing the immediate financial impacts,” says Mr Gudsell.

“Through a mixture of existing capital spending budgets, insurance recoveries, our climate change response fund, other central government funding and the debt headroom we already have, we consider we can deal with the near-term financial effects of this devastating and tragic event.”

To increase our level of preparedness for future storm events, we may also need to make additional provision in our operating budgets for proactive and reactive storm response and recovery activity.  

“The medium to long term impacts on the city’s infrastructure will need to be carefully considered through the next long-term plan process.”

2023/24 budget

While responding to the flooding is Auckland Council’s priority, the challenge of balancing the $295 million shortfall in next year’s budget (and beyond) remains.

“We need to continue to address the council’s immediate budget challenge. It reinforces the need for us to have financial flexibility to manage such unforeseen events,” says Mr Gudsell.

The council is continuing with its work to ensure public consultation on the Annual Budget 2023/24 takes place from February 28.

The proposed budget includes significant reductions in council spending and measures to simplify the council’s work. The budget consultation process provides an opportunity for the public or any other interest parties to have their say on these proposals.

Mr Gudsell says Aucklanders impacted by flooding and slips remain front of mind for the council. We are grateful for the support of our communities who have helped through this time and send our deepest condolences to the families of those who lost their lives. 

“We are also mindful that some ratepayers severely affected by the weather events might have issues with paying their rates, and there are payment arrangements that can be put in place,” he says.

Auckland Council will continue working with the council group to assess potential operating budget changes for the 2023/24 financial year. Any proposal that would require additional funding would need to be agreed by the Governing Body before adopting the consultation materials for the Annual Budget 2023/24 on 15 February 2023.  

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