“Everything” Auckland Council owns and runs is potentially on the chopping block to help balance its books, one of its newest councillors says.
The city is facing a $295 million “budget hole”, according to mayor Wayne Brown, who has proposed selling the council’s share of Auckland International Airport to avoid having to hike rates more than 13 percent.
Auckland Council has an 18 percent stake in the airport, but Brown says the shares “haven’t paid a cent in dividends” in the last three years, costing the city $88 million annually in debt servicing costs.
Selling them, combined with cuts to local board and council-controlled organisation (CCO) spending, would keep next year’s rate rise to under 5 percent, Brown said.
The new mayor has the backing of Maurice Williamson, a former National Party Cabinet member who is now one of two councillors representing the Howick Ward.
“What Wayne Brown has put together for this financial year starting next July is, I think, a really, really smart way of making sure that people aren’t paying for it by way of extra bus fares, because that’s not the way to fix big-ticket items is to put the penalty onto people in a cost of living crisis,” Williamson told Morning Report.
“It’s not by doing sort of, tinkering around the edges, but by big, substantial changes.”
Brown’s plan has been criticised by prominent economist and financial journalist Bernard Hickey, who said selling the city’s golf courses could make close to $3 billion, and save more than $160 million a year. Selling the airport stake would see the city lose out on dividends when travel gets back to pre-Covid levels, Hickey said.
“That’s one of the alternatives that will be looked at in the long-term plan,” Williamson said.
“These are measures for now to get things underway… Everything is to be looked at. Everything. Local boards’ operations… there’s a whole lot of duplication going on across the various CCOs and so on. We’ve got to look at how that’s delivered. Everything.”
Auckland Council has more than $11 billion in debt, but an AA rating from credit rating agency S&P with a ‘stable’ outlook. Williamson denied the proposed sell-off was not “ideological”.
“The problem you’ve got when you face a financial crisis, like the council is facing, is everything has to take a cut. That is the local boards, that is the council-controlled organisations, that is the head office. What the mayor has done across the board here is everybody has to tighten their belts.
“He says he does not want to put the 13 percent rate increase onto ratepayers and I’m really pleased he made that decision. In my patch of Howick, you’d be strung up by the yardarm if you started suggesting 13 percent.”
Brown’s proposed rate rise of about 4.6 percent is made up of a general rates rise of 7 percent, offset by reductions in targeted rates. The latter are used for various environmental and climate projects, such as stormwater projects and fighting kauri dieback, plus waste management, electricity network resilience and free swimming pools in some regions.
Williamson said while important, the council “cannot be spending money that we don’t have”.
“We don’t have the money, we have the debt.”
The full details of the mayor’s plans have not been released yet. He did not return Morning Report’s calls.
The proposal will be discussed at a council meeting next week.
Story Credit: rnz.co.nz