Today Auckland Councillors voted to adopt Mayor Wayne Brown’s amended Annual Budget, agreeing to a partial sale of council’s Auckland International Airport (AIA) shares to pay down debt, and reaching a compromise on cuts to services, debt, and rates.
“This is the best, most prudent, balanced budget for Aucklanders that I’ve been able to achieve,” Mayor Brown said.
“This budget represents a large reduction in the Council’s debt, protects core services and keeps rates under control. It is the start of the work to fix the Council’s budget and secure our financial sustainability.”
“After 29 workshops and over 90 hours of formal discussion, we have reached a decision on the most challenging and contentious Annual Budget in the history of Auckland Council.
“Most importantly, it deals with our most pressing issue – that we are spending more money than we are bringing in,” says Mayor Brown.
Elected members also voted to keep residential rates affordable, with a 7.7 percent increase for the average household, amidst a cost-of-living crisis.
“It is clear we should not use debt to fill an operating budget hole – to me, that is the essence of financial mismanagement. Loading future generations of Aucklanders with debt because we didn’t have the courage to make hard decisions about living within our means, would have been unacceptable.
Council amended its long-term plan to provide for a partial sell-down of its while maintaining a 10% shareholding, and agreed to proceed with the sale of around 7% of the council’s 18.09% shareholding (103,097,466) of council’s current shareholding of 266,328,912 shares) in Auckland International Airport.
“This will allow us to realise around $865 million and immediately pay down debt. It will save a net $23 million of interest costs in 2023/24 and $115 million over the remaining term of the 2021-2013 Long Term Plan.
“However, a partial sale will mean we need to find another $37 million in operating cost savings or rates to balance the budget and fill the $365 million budget hole.
“This means we have had to reinstate $4 million of cuts for local board spending and will require the Chief Executive of Council to find another $5 million of cuts to spending, bringing the total savings for Auckland Council to $33 million.
“We all want what is best for Auckland and that has guided our decision. It is different from the proposal we consulted on, and this reflects the feedback we have received from all Aucklanders,” says Mayor Brown.
A political working group will be established to determine Auckland Council’s ownership objectives for the remainder of AIA shares, and long-term use of debt headroom.
KEY POINTS | Annual Budget 2023/24:
- Average residential rates rise of 7.7%.
- Partial sale of shares in Auckland International Airport (AIA) to pay down around $865 million of debt, with a net funding benefit of $115 million over the next eight years.
- $83 million of operating spending reductions.
- $105 million of debt.
- $10 million improvement in Ports of Auckland’s net operating performance and dividend projections.