Statement: Mayor Wayne Brown on his budget proposal

Publish Date : 01 Jun 2023
Mayoral Speech At AT Boardroom

Today, Mayor Wayne Brown delivered a statement about his final Mayoral Proposal for Auckland Council’s Annual Budget 2023/24.

Tēnā koutou katoa.

Good morning.

Thanks for joining me here at Auckland Transport.

I hope the traffic wasn’t too bad.

Unfortunately, there may be further detours and delays ahead, and too many ‘bloody road cones’, as we develop the most significant Annual Budget in the history of the Super City.

When I say, ‘the most significant’, what I really mean is ‘the hardest’. The Finance Minister probably has an easier job of it than me. He can print money, and his budget doesn’t have to go to public consultation.

Seriously, we have a massive problem.

I inherited an Annual Budget hole that’s grown to $325 million, on top of a staggering $12.3 billion in debt.

I also inherited a ‘return cast’ of councillors. Most of them characterised by low financial literacy and a severe aversion to making difficult decisions that may prove unpopular. And, many of whom sat back and allowed Auckland Council to borrow its way out of trouble, year after year.

COVID-19 didn’t create this mess, it was irresponsible financial decision-making and avoidance at the Governing Body.

Unfortunately, it has now caught-up with us.

Most households cannot afford steep rates rises, and I’m not prepared to do that. So, I am going ahead with my Mayoral Proposal, give or take a few spending cuts, and fighting for Aucklanders as they battle the cost of living crisis.


My proposal still stands

Yesterday, the final Mayoral Proposal was ‘wrestled with’ by councillors at a Governing Body workshop.

In it I proposed the full sale of our 18% shareholding in Auckland International Airport, currently valued at around $2.3 billion.

Residential rates would still be low at 6.7%. Anything higher than inflation would place an undue burden on households.

As mortgages and utilities go up, Aucklanders have been hit hard at the petrol pump and supermarket. I feel bad for them. It makes me more determined to stop wasteful spending across the Auckland Council Group.

But I always said, ‘we will listen to what matters most to Aucklanders’ and that means softening spending cuts, from $125 million to $74 million.

In response to public feedback, the current funding for arts and culture, local boards, and the Citizen’s Advice Bureau will remain largely untouched.  

While I loathe debt in my capacity as Mayor, additional borrowing of up to $100 million may be required.

Let me be very clear. The success of this budget is contingent on the full sale of airport shares. That is not a threat or scaremongering – it is simply the best solution that we have.

This is the only way to prevent steep rates rises, claw back community funding cuts, and pay-off our most expensive debt. Our capacity to borrow more isn’t the issue. The real problem is whether we can service that debt.


We must reduce debt

Auckland Council has clocked-up almost $12.3 billion in debt. The interest payments alone are around $500 million a year, or $9 million a week; that’s equivalent to $20,000 per household.

To get us out of this hole, and closer to financial sustainability, we must reduce our debt. That’s why I proposed the sale of airport shares. It wouldn’t be just a short-term sugar hit, but part of a financial reset with longer-term benefits.

If we sold our full shareholding, we could pay-down more than $2 billion in debt, and reduce annual interest payments by $100 million, ongoing.

Contrary to speculation, we won’t just borrow it all back again; that would be utter stupidity. I plan to prevent that from happening by lowering the Council’s debt ceiling, and introducing a framework for more responsible borrowing and spending as part of the Long-Term Plan in September.

Nor would we be flogging the family silver. Auckland Council’s 18% stake in the airport is mortgaged to the hilt. It’s cost us more to hang-on to these shares than they ever returned in dividends.

As a minority shareholder, with no seat on the board, the airport is not a strategic asset for Auckland Council. Technically, it’s a poor-performing financial investment.

Auckland Council has significant land holdings adjacent to the airport and regulatory powers that, if exercised properly, would provide greater influence over the airport company’s strategic direction, ensuring it aligns with Aucklanders’ best interests.


Positive changes

The Annual Budget serves as a wake-up call.

It’s now been more than 200 days since I was sworn into the Mayoral Office, courtesy of 180,000 Aucklanders who voted for my five policies:

  1. Fix Auckland’s infrastructure
  2. Get Auckland moving
  3. Stop wasting money
  4. Take back control of council organisations
  5. Make the most of our harbour and environment
Wasteful spending is being reined-in across the Auckland Council Group, and we’re finally seeing good cost reductions.

Construction on the final phase of the Eastern Busway has started, dynamic bus lanes are being trialed, and AT is working with Waka Kotahi and utility companies to improve Temporary Traffic Management. We’re also making steady progress on Auckland’s first integrated transport plan for people and goods.

We are looking at legislative and structural change, to help put Aucklanders in charge of our region.

More resource and decision-making powers will go to local boards.

We are making progress.


The final vote

Next week, the Annual Budget will be put to the Governing Body to vote on. But, right now, I want to address those councillors who intend to oppose it.

There are people in this room who signed a pledge during the last local elections. And I have a copy of that pledge with me.

John Watson and Wayne Walker, I’m looking at you.

In case you forgot, this is what it said:

“I …. pledge to all Aucklanders that I will not vote for any new targeted rates, nor any measure that will increase the total average burden of rates, levies, and other compulsory Council charges above the rate of CPI Inflation.”

Both of you signed this pledge, and you’re not the only ones. The point is, having explored all the options, there’s only one way to keep rates at inflation – sell the airport shares.  

I strongly urge all councillors to set aside your aspirations and ideologies. Look at the mess that’s right in front of you, and do what is necessary to fix this budget hole, once and for all.

We can support the needs and aspirations of all Aucklanders, but only from a sustainable financial position.  

Public feedback on the sale of airport shares was inconclusive, so it’s up to us. Make the tough decisions, because it’s the right thing to do. A lot has changed since the draft Mayoral Proposal was approved for consultation in December.  

Aucklanders will thank you later.

Before we finish, I want you to look around.

This vast architectural monstrosity is often referred to as ‘The Waterfront Palace’. The previous tenant, Vodafone (or One New Zealand) left because it was too expensive.

But AT refurbished these premises, at a cost of $11 million, and spends $6 million on the annual lease.

Well, enjoy it now, because the ‘culture of extravagance’ and wasteful spending that led to a budget hole of $325 million has come to an end.

We could house the entire AT workforce in council-owned buildings, and I reckon we will.

If you’re the last to leave, turn the lights off.

Read the Mayoral Budget Proposal here [PDF]

Thanks for coming.

Kia kaha.

Back to News