Online information session 1 [transcript]

[Holding slide on screen that says “Balancing the Budget – have we got it right?” Online information session, Tuesday 7 March 2023 with a blue background that has a yellow speech bubble and AK Have Your Say logo.]

[Speakers David Gurney, Deputy Mayor Desley Simpson, Ross Tucker, Peter Gudsell, Claudia Wyss all on screen in front of Annual Budget 2023/2024 Ak Have Your Say background.]

[00:01:10.780] - David Gurney:

Good evening, everyone. Tena kotu welcome.

I'm David Gurney, Head of Strategy and Planning at Auckland Council, and I'm facilitating this conversation this evening.

Thank you for joining us for tonight's information session on Auckland Council's Annual Budget 2023/2024.

The purpose of this session is to learn more about our proposals for the 2023 and 2024 budget. It's not an opportunity to provide feedback, but instead to ask questions virtually and hear from our finance team and our deputy mayor, Desley Simpson.

Just a reminder that consultation on our budget runs from 28 February through to the 28 March, and further information, including the feedback form, can be found at akhaveyoursay.nz/budget.

Tonight's session will provide an overview of our proposal for the 2023/2024 budget. The budget aims to address an estimated shortfall of $295,000,000 while continuing to prioritise services that Aucklanders need and that Aucklanders value.

Just a few housekeeping notes on tonight's Zoom meeting and a little bit of a reminder about Zoom etiquette. So, this session is being recorded and will be available on the AK Have Your Say website in the next few days. All members of the audience will have their cameras and microphones disabled, but the members of the audience can ask questions via the Q and A function.

[Speakers David Gurney, Councillor Desley Simpson, Ross Tucker, Peter Gudsell, Claudia Wyss all on screen in front of Annual Budget 2023/2024 Ak Have Your Say backgrounds.]

[00:02:54.260] - David Gurney:

Please note that we might not get to every question, but we will try our best in the 90 minutes that we will be together. And we want this place to be a safe place for everyone. So when you ask a question, please ask it courteously and respectfully, and then will all feel reasonably safe.

Joining the discussion tonight, we have the Deputy Mayor, Desley Simpson. We have Dr. Claudia Wyss, the director of customer and community services, Peter Gutsel, our group chief financial officer, and Ross Tucker, who is our general manager of financial strategy and planning.

As I've mentioned before, this session will take about 90 minutes. It will start with an introduction from the mayor, who will do an introduction via video. Then we will ask this councilor Desley Simpson to give her perspectives on the budget. And then finance will do a quick video just to cover the main aspects of the budget.

And then the rest of the session will be over to you, our audience, to ask questions about what's in the budget and what might can move forward.

So, to kick us off for the evening, let's start from hearing a few words from Mayor, Wayne Brown.

[00:04:31.230] - Mayor Wayne Brown:

[Video: Mayor Wayne Brown speaking with Auckland Harbour Bridge and sea view as the background]

Kia ora. The 2023/2024 budget is now open for consultation. This year's annual budget is like no other with a significant gap between revenue and spending.

Over the last few years, when economic conditions were good and property values were rising, council did not raise enough

[...minor pause with pre-recorded clip...]

rates revenue to maintain and develop infrastructure. This has meant that I've inherited a 295,000,000-budget hole at the same time, when ratepayers were under pressure from higher mortgage rates and inflation combined with sliding property values.

Households, both ratepayers and renters, are under pressure.

So zero dividend investments like the Auckland Airport shares are a luxury we cannot afford and must be sold.

My budget proposal sets the groundwork for overhauling Auckland Council's Group's finances, which will make Tamaki Makaurau a resilient and prosperous city.

With a $295,000,000 budget hole, I'm proposing a combination of levers to deliver a balanced budget.

While the costs associated with the devastation of the January 27 floods in Cyclone Gabriel are yet to be fully realised, now is the time to act. It's time to cut excess spending and get our debt under control so that we have the financial ability to fix Auckland's infrastructure.

The consultation process provides an opportunity for you, the public, to give feedback about the things that matter to you and for you to respond to the 23/24 budget.

We have some tough choices to make.

Head now to akhaveyoursay.nz/budget and have your say.

Ngā mihi, Wayne Brown.

[Speakers David Gurney, Deputy Mayor Desley Simpson, Ross Tucker, Peter Gudsell, Claudia Wyss all on screen in front of Annual Budget 2023/2024 Ak Have Your Say backgrounds.]

[00:06:37.690] - David Gurney:

Great. Thank you for playing that video. And as the mayor concisely said, we have a significant gap that we have to fill between our review and our expenditure.

Deputy Mayor Simpson, I've heard you comment that this is probably the most important budget that Auckland Council's ever had to put together. Just wondering if you'd like to provide some comments.

[00:06:59.310] - Deputy Mayor Desley Simpson:

Thank you, David. Yes, it is.

Look, I thought the emergency budget was tough, but there's no doubt in my mind this one is indeed a lot tougher.

So I want to say a few things just to follow on from the mayor.

First, we have to, by law, provide a balanced budget, so we can't leave that whole. We've got to close the gap.

Second point I want to make is that in this budget, we're only asking for 37 per cent of our income from the ratepayer, and that's important - 37 per cent.

The rest of that income that we need is earned income from fees, charges, financial investments. All those things, though, have taken a big hit for us over COVID. And like everyone, our costs are being impacted by the current inflationary environment.

Inflation is having a huge impact on all aspects around the council budget.

The cost associated with replacing, fixing, or building anything new is a perfect example. All these things are costing more than they ever have before.

So it's a combination of factors that's contributed to that 295 short fall. So we have to respond by using all the tools at our disposal.

So one of the main options that we're talking to Auckland is about is to sell, potentially sell council shareholding in the Auckland Airport.

Our shareholding is worth about 2 billion. But despite that, as council and as a community, we cannot influence board decisions, the direction of the airport, or control how much income we get from holding those shares.

Now, council has a prudent amount of debt, which allows us to build infrastructure for future generations. We are currently well within our debt limits and we have a high credit rating from the agencies who monitor us.

However, if we sell the airport shares, we can actually reduce that debt and therefore our interest costs by around about $87 million a year. And we're asking you, should we do that?

Another component is continuing our programme of reducing costs, which we have done since amalgamation, to the tune of about 2.4 billion. And I'm sure that you're all very pleased that council has done that, but there is more that we can do as well.

And so the proposal takes on additional spending restraint and our staff will cover that with you later.

And finally, the rates increase. Look, it's another lever and one that is dear to many people's hearts.

So, yes, we are proposing a rates increase overall, but it is less than the rate of inflation and we have to be mindful of the cost of living crisis and not to hit our ratepayers too hard with more cost increases, but are our rates increases pitched correctly?

So I urge you to listen carefully tonight. Read our consultation material and then it's over to you. We want to hear your views.

I know there will be things in this budget proposal you may not like. There are certainly things in it that I don't like.

The key, however, is to solve the shortfall that we have.

Therefore, if there are things that you want to keep, please, you need to give your opinion about the alternatives we should consider instead.

There is no way around this challenge, but together we can come up with a budget that will take us to a more credible, sustainable and affordable position for the future.

I'll now hand back to our MC. David, thank you.

[00:10:48.950] - David Gurney:

Thank you, Deputy Mayor. I'd like to encourage people were already getting some questions through, so please, if you have a question, put onto the Q and A function within the chat.

We're now going to move on to a ten minute presentation by our finance team, who will take us through an overview of what is in this year's budget proposal. So let's move to that video now.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy blue Auckland Council background.]

[00:11:20.590] - Tamsyn Matchett:

Kia ora and welcome to Auckland Council's consultation on its annual budget for the 2023 2024 financial year.

This is a process focused on providing you a chance to have your say and to be heard by your elected representatives.

This short presentation looks to provide some initial information on the issues and challenges currently facing the council and how we are proposing to address these in the coming year. There is more detailed information available on our website.

We hope this information will support you in providing your feedback to councillors and local board members to inform the decisions they will need to make.

[Animated image: A tractor and driver scooping up shapes to represent $295m budget challenge.]

Tamsyn Matchett:

Just like households and businesses, the council prepares an annual budget to make sure it plans and manages its revenue and spending. Also, just like households and businesses, the council's costs have gone up dramatically, particularly over the past twelve months, and we are facing a budget shortfall of $295,000,000 we need to address.

Fortunately, we have some options to manage the shortfall, but they are limited and will require some tough choices before our next financial year begins on the 1 July 2023.

Our annual budget consultation is your opportunity to have your say on those choices.

[Image: Sky Tower, other city buildings and Harbour Bridge.]

Unfortunately, this is not the first year that council has faced a budget challenge. Balancing our budget has been getting harder and harder each year.

The $295,000,000 shortfall is in part due to an expansion in the costs of providing an expanding range of infrastructure and services.

Over successive decades, this has been worsened by economic factors such as rising inflation and interest rates, and supply chain and labour market difficulties.

The recent severe weather events that have hit our region makes dealing with the financial situation an even more significant challenge. So it's important now more than ever to look at how we can carefully balance the budget while focusing on the services that matter for Aucklanders and providing those services in the most effective and efficient ways.

[Animated image: Coloured cog wheels, Sky Tower and city buildings.]

When thinking about the best mix of options to get that balance right, we ask that a few criteria be used.

Is it credible? Does it build confidence in our financial management? Is it sustainable? Is it an ongoing solution or a temporary fix? Is it affordable?

We need to think about people's ability to pay both now and in the future. Is it implementable?

In order to play its part in solving next year's budget gap, it needs to deliver benefits from the start of the year.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy blue Auckland Council background.]

We can then look at the options we have, each with different limitations and impacts on community outcomes, affordability and long term financial sustainability.

Those options need to work with each other like the cogs of an engine. If we change the size of one, we need to change the size of another to bring it together.

Michael Burns:

[Image: Coloured cog wheels, Sky Tower and city buildings.]

Having looked at the options, the council is proposing a mix of four tools to meet the budget gap for next year.

We are proposing significant reductions in spending. Some of this will be efficiency savings, but it will also mean impacts on our services. Some of these changes are already underway.

We are actively progressing savings of $40 million across the group in areas like simplifying management portfolios and structures, improving the efficiency of our processes, reducing internal back-office budgets, implementing group shared services, and consolidating strategy and policy activity.

We are proposing to sell our shares in Auckland International Airport. This will reduce debt and save us interest costs.

We are proposing a rates increase of around 4.66 per cent for the average residential property, and we are proposing a modest amount of additional debt.

[Image: Large orange cog truck, tree, Sky Tower and city buildings and a male in a high vis vest, hard hat and tripod.]

Auckland Council have already decided to reduce costs by simplifying management structures and sharing resources more across the council group, with implications including staff reductions.

Our proposal to save $125,000,000 would also require us to make other reductions, including maintaining the current reduced number of public transport services to save $21 million.

[Video: speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy blue Auckland Council background]

Michael Burns:

Reducing our funding to Tataki Auckland Unlimited to save 27.5 million with effects on service delivery.

Reducing regional services, regional events, economic development and other social services to save $20 million.

Reducing local board funded activities across all boards to save $16 million.

Reducing regional contestable grants to save $3 million and no longer provide directly providing early childhood education services to save $1 million.

[Image: Annual Budget 2023/2024 Supporting Information pictures displayed along with the Sky Tower and city buildings.]

The details of these changes is in the supporting information pack provided alongside our consultation document on the council website.

The services the council delivers are divided into those governed by the mayor and councillors and those looked after by local boards.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy blue Auckland Council background.]

As part of the reductions to operating spending, the council is proposing a reduction to local board operating funding of $16 million, or 5 per cent of funding within the local board decision making allocation across all 21 local boards.

This reduction is allocated across the boards under the existing allocation policy that looks at population, deprivation and land area.

Local boards might choose to reduce their discretionary initiatives or could consider changes in levels of service, such as reduced venue opening hours or increases to revenue through amendments to fees and charges.

Each local board has identified the areas where change would be needed for them and outlined them in the consultation material.

[Image: Airport, Airport look out control tower, planes on the runway and a plane taking off.]

The council owns shares in Auckland International Airport Limited, equivalent to about 18 per cent of the total.

The proposed budget includes a policy change that would enable us to sell these shares and reduce the council's debt.

Selling all of our shareholding in Auckland Airport would reduce our debt by an estimated $1.9 billion and interest costs on that debt to save an estimated $87 million each year, which is greater than what we'd expect to earn from the dividends if we kept the shares.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy-blue Auckland Council background.]

We have also looked at other options, including keeping all those shares or a partial sale that reduces our shareholding while maintaining at least 10 per cent.

These options would contribute less towards our budget reduction target and require other actions, most likely by further increasing rates or debt within our policy limits.

[Image: Large orange cog truck, tree, Sky Tower and city buildings and a male in a high vis vest, hard hat and tripod.]

The next lever to look at is rates. We're proposing an increase to rates that will come to 4.66 per cent for the average value residential property. This includes an overall average general rates increase of 7 per cent, but this is reduced by some other rates adjustments.

Firstly, we are proposing to reduce how much we are collecting for the natural environment and water quality targeted rates and to use up funds we have built up and reserve for these programmes.

This will not reduce the work that goes on in these areas.

Secondly, we are proposing to pause our gradual movement in the split of rates paid between business and residential properties.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy-blue Auckland Council background.]

If we proceed with a proposal for additional storm response investment, this could mean an additional rates increase of 1 per cent.

[Image: Large green cog truck, tree, Sky Tower and city buildings and a male in a high vis vest, hard hat and tripod.]

The council is proposing to use a bit more debt to fund our capital expenditure that was going to be funded from operating revenue proposed to increase our use of debt by up to $75 million for 2023/2024.

Our current financial settings would allow us to use up to $140,000,000 of additional debt.

However, using debt will not address the underlying operating cost challenge each year and merely postpones the need for a long-term solution to the ongoing budget gap.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy-blue Auckland Council background.]

Greater use of debt also increases future interest costs.

It reduces debt headroom available to address any unexpected financial shocks.

For these reasons, our view is that debt should be used only sparingly and only as a last resort to address the operating budget gap.

[00:20:47.420] - Tamsyn Matchett:

[Image: Planes, people, children, whare, bus filling up at a gas tank, airport control tower, rubbish bins, film clapper board, Māori carvings and female worker in a high vis vest and hard hat.]

Over the next month the councillors and local board members will be listening to your feedback, and staff will be working to refine and update budgets.

If decisions are made to use less of one option, or if the financial challenge worsens, we might need to make up the shortfall another way.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy blue Auckland Council background.]

We would need to consider a higher rates package that could see a total rates increase for the average value residential property of up to 13.13 per cent or $433 a year, which is about $8.30 a week.

We could also look at increasing debt further.

However, more debt will increase interest costs and doesn't address the need to spend within budget. It also makes it harder to respond to any unexpected financial shocks.

It is worth noting that the proposed budget still allows for a wide range of crucial everyday services to be provided for Aucklanders, as well as $2.8 billion of capital investment in the likes of transport assets, parks and community facilities, city centre and local developments, urban regeneration and cultural development, and environmental management.

We may need to bring forward some asset renewal spending for storm damaged assets, and we can do this by reprioritising and delaying some of this new capital investment.

[Image: Hazard sign, storm cloud, work man, water dam, Sky Tower and city buildings.]

Throughout the consultation document, you will find text boxes that contain details on the potential impacts of the recent storm events.

We recognise that while we still don't know the full picture of the damage, the costs could be substantial, and we will need to reprioritise our capital programme to address urgent maintenance requirements.

Additionally, we are proposing to increase our operating budgets for proactive and reactive storm response by around $20 million each year. This may require the rates increase for 2023/2024 to be 1 per cent higher than proposed.

Further investigation is underway as to where the money is spent, but it would be prioritised based on the areas of highest risk.

[Image: Workman with tripod, bus, rubbish bins, Sky Tower and city buildings.]

We are also proposing some changes to other rates the council charges, including the waste management targeted rate to ensure that we recover our costs.

Most of our fees and charges are being adjusted in line with inflation or to better reflect the costs associated with managing these services.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy blue Auckland Council background.]

The consultation material also includes a summary of the Tupuna Maunga Authority's operational plan.

[Image: Sky Tower, city buildings and an image of the Annual Budget 2023/2024 feedback form.]

Aucklanders are invited to have their say on the proposed mix of options to close the budget shortfall. The feedback question found on our feedback form specifically asks Aucklanders to identify options should they not want to use certain levers as we have proposed

We also want feedback on local board priorities and changes to other rates and fees.

[Image: A timeline shared between five blue circles in a row with arrows pointing to next step.]

These next steps take you through to final decision making in early June.

[Video: Speakers Tamsyn Matchett and Michael Burns sitting behind a desk and microphone with a navy-blue Auckland Council background.]

Thank you, Auckland. We look forward to hearing from you throughout March.

[Animated image: Large blue circle shape with akhaveyoursay.nz/budget inserted in the middle.]

For details on all the events we have scheduled, head along to our website akhaveyoursay.nz/budget. Kia ora.

[Speakers David Gurney, Deputy Mayor Desley Simpson, Ross Tucker, Peter Gudsell, Claudia Wyss all on screen in front of Annual Budget 2023/2024 Ak Have Your Say backgrounds.]

David Gurney:

I'd like to say thank you to the finance team for a very good summary of what's in the budget.

Of course, nothing makes up for reading the consultation documents, so I'd encourage everyone to go to AK Have your Say and have a good read of the consultation documents that you will find here.

We've got lots of questions coming through, which is great to see. So I thought I'd kick off with a question from Ron.

And so, Peter, I'll be targeting you to answer this question.

The question is about the mix, the options that were mentioned in that video. So Ron asks, why does the budget consider asset sales and service cuts as well as rates increases below the current rate of inflation, but does not consider raising rates by enough to cover most or all of the suggested deficits?

And Ron's done a little bit of a calculation. He's worked out that if he had a rates increase of 10 per cent, his increased rates would be about $10 every week.

So he's asking, why is this a problem? Peter?

Peter Gudsell:

Thank you, David, and thank you for the question, Ron. It's quite a large question. It probably covers many, many elements that have been explored within the video itself. And perhaps the best place to start is with a framework of why we think a mix of our various levers is available.

And by levers, I mean what ability we have to change the financials for the council.

So we are looking for something that's credible, sustainable, affordable and implementable. So those are the key dimensions by which we assess the various aspects that we could use.

So by credible, we mean it builds confidence in the council's financial management with ratepayers, but also with residents, communities, businesses and investors, those investors who lend us money for us to spend on our infrastructure, it needs to be sustainable.

So providing that ongoing solution so we do not have to contribute to a larger balance challenge for next year and the year after.

Affordable. Affordable goes to one of the key points around rates. We need to avoid unreasonable costs or shocks for ratepayers and service users now and in the future.

So substantial rates increases for next year could create affordability challenges for some ratepayers.

And we did hear that called out in the mayor's video around cost of living as well.

Of course, other actions may just delay this impact and may result in larger rates increases within the next couple of years.

The final aspect that we have to take into account for this budget, which has to be by law struck and agreed before the end of June is implementable.

We have to deliver benefits from the beginning of 1 July this year to close the budget gap and create a better foundation for the next long-term plan.

So taking more fundamental changes and thoughts around services, for instance, than what we are consulting on, we'll need to wait for that long-term plan will then be subject to a more fulsome analysis of those options in consultation.

So using any one option on its own would not meet those criteria. And if we use any lever at a lower level than proposed in our consultation document, we need to use another option to a greater degree.

That's the cogs and the engine type analogy. If one isn't turned as much, something else has to turn more. I'm probably breaking the analogy.

The options have many limits and our choices are restricted.

So policy limits restrict our debt, for instance, and the lead time to make changes for the next financial year could restrict our cost reductions.

You've asked if that's a partial answer about the frame and the reason why we have a mix of options. But in terms of the rates question explicitly, we do mention within the consultation document material the degree of rates increase initially.

The long-term plan that sets the default position for this budget was suggesting 3.5 per cent. Now obviously this was set a couple of years ago, before inflation, before interest rates only just within COVID, and various other aspects now as well.

But if we were not to take other additional mitigating actions, general rates would need to increase by a further 10 per cent on top of that 3.5 per cent.

So that is explained as a 13 and a half per cent rates increase if other options and the other levers were not used in a balanced way. So that would be 13 and a half per cent.

Where we're currently consulting within the document is an overall average general rates increase to existing rate payers of 7 per cent.

Now, I know that within the documents what leaps out is 4.66 and the reason for that difference is there are mitigations in place based on the understanding of the affordability and cost pressures for the community at the moment.

So those mitigations that pull that general rates figure down from 7 per cent, which is very close to CPI currently, or as has been recent, a reduction in the long term differential strategy for a year, it has paused for a year.

And two targeted rates - the National Environment Targeted rate and Water Quality rate - are proposed to provide temporary relief as well, through some pausing in that aspect. I must stress that that's pausing the collection of the rate, it's not pausing the spend to undertake the works that are expected underneath that rate.

So the key aspects around rating options are really that sustainability and affordability.

Ron, you are absolutely correct with your figure around, I don't know your own personal situation, around the value in the rating. Rating increases of 1%, for instance, would raise $20 million and the impact for the average residential householder would not be that large. It would be in the order of $28 or about fifty cents per week.

So an extra 1% is not significant. I would also agree with you that and we say this within the background material, that as a general principle, continuing with general rates increases that are significantly below inflation, will mean not addressing the underlying issue of an imbalance between the council's costs and revenue trends. And again, you heard that message within that imbalance message came through in Mayor Brown's video.

So even if this could be achieved by using other levers to solve the current 295 million estimated budget challenge, that approach is unlikely to be credible or sustainable.

So hopefully this very long answer to a very good question has helped explore some of the tensions and trade offs between the various ways in which we can solve that 295 and has also assisted in understanding how the rates lever works there.

There are options within the feedback form for you to provide input on the degree to which you feel rates are just right, too low or too high in combination with the other services.

[00:32:28.290] - David Gurney:

Thank you, Peter.

Of course, with these options we are really going to have to think carefully about the services we provide in our community. So there are a couple of questions here that I'm going to direct to Claudia Wyss, who's our director of customer and community services.

So one of the questions talks about is the shortfall seems to be never ending. Is Auckland Council working on any future proof of scenarios and or a total reshape of service profiles?

And someone else has asked a more specific question about the Citizens Advice Bureau funding. Please explain where people will go to help if the Citizens Advice Bureau is no longer operating.

I'm just wondering, Claudia, if you would like to comment against those questions.

Dr Claudia Wyss:

Kia ora David and happy to comment. Thank you for the questions.

So, in terms of our overall service provision, you would have just heard Peter before, talk about the importance of thinking strategically about our long-term service provision as part of the long-term plan.

The long-term plan is a budget cycle that we follow. It sets out the ten-year direction and it happens on a three-yearly basis. So we have the opportunity to relook at our long-term plan and what this may mean for our services.

We're starting that process now, but we will be going to consultation to our local boards as part of that development of the long-term plan and then it will go out to proper consultation next year.

The long-term plan allows us to really think strategically. What does this mean for our services? What does it mean for our assets? Where may we need to pull back from some of our services or assets, particularly if we're seeing changing customer trends?

And we are seeing some changing customer trends and those existed before COVID started, but they have been accelerated as a result of COVID.

What that means is that in some areas where we're seeing a decline in our customers using our services, it may mean that we could provide services more effectively in another way, so that we can better meet those customer needs for the future.

But because of the urgency of closing the budget gap this year, for the upcoming financial year, we have had to make some immediate suggestions in terms of where some operating savings can come from.

So we have been limited in what we could select. And some of the key limitations are as a result of contractual obligations that we have or other legal obligations.

So that means that for this financial year that's coming up, we've had to really look at some of those areas that may have a potential impact on our communities, but that we have essentially up our sleeves in order to make the savings that we may need to make.

Of course, all of those savings proposed are there for your review and your feedback, and we do encourage you to do so. And you've heard about the various levers that Peter's just mentioned before.

In terms of the CABX, that is one of the potential savings that has been put forward. And the reason for that is that there is an ability to propose that in the saving as part of our contractual arrangement. And also a few years ago, there was a review of the services that the CABX provided.

And at that stage in 2020, the CABX was providing services that supported a number of central government initiatives. And only 2 per cent of the CABX services at that stage were covering core local council initiatives.

What the review also looked at is the types of Auckland Council funding to CABX compared to other councils and Auckland Council funds CABX more than other councils do. And CABX does have alternative sources of funding, although we do recognise that this cut may result in a shortfall to the CABX.

What we're not proposing to do in terms of changing CABX funding is removing any of the Peppercorn rental subsidies, which in 2019 were estimated at $640,000 or thereabouts. And so those Peppercorn rentals would still be there. And the CABX also still have access to the reserves funds that they've accumulated over time through council funding.

While those are not large amounts, over a period of time, that funding will not be removed.

So we do recognise it would or may have an impact on the CABX and the communities that the CABX serve. This is why it has been put forward for your feedback, so that you can provide us your recommendations and what your priorities.

David Gurney:

Thank you, Dr. Wyss.

Deputy Mayor Simpson. I'm just thinking you're an elected member in the communities, and so I just wondered if you have any comments you'd like to make just in response to Claudia's answer on impacts in the communities and why it's so important that people actually do feedback on this budget, because it potentially does have some effects this time on communities.

Deputy Mayor Desley Simpson:

Yes. Thank you, David.

I think that our communities across Auckland are all very different.

So what may be very important for one may not be as important to another.

There again, there might be some common threads, and I think Dr. Wyss has articulated the cuts that have been sort of proposed in this budget. But to help the budget shortfall, would Aucklanders accept their library closing one day or an hour earlier or some of those other options?

How important are these things for you in this at the service levels that they are currently at?

And I think for me particularly, I'm really interested in everybody's say on those issues because, as I said, I'm very aware that every community has slightly different impact, and look just on the CAB, to pick that one up as well, I don't think anyone's saying here that the work CAB do is not important. It is incredibly important and Aucklanders need that service. So I don't think that's the issue.

The issue is, would you be saying that because the content of what people are asking for is not so much local government focused, but more central government focused, should they be the ones that are picking up the tab? And I think that's a discussion that if that's what Auckland is think, we need to be having with central government.

But at the end of the day, it's been a suggestion put to us for the reasons that Dr. Wyss has outlined, because of the amount of asking that is relevant to local government. I mean, we have 170 elected members that should be available seven days a week to answer council-based questions on top of our call centre, et cetera.

So it's really important for some of those service level things, I think the impact to hear from Auckland as to the impact on grass mowing, Dr Wyss, the grass mowing.

There will be parks that people say, look, we really need to keep this pristine, our sports fields and stuff, and we get that. But is there a local park that actually could be left for two weeks longer than it currently is, or is that really important to you to keep with them as they are?

And if it is, where should we save that money from?

David Gurney:

Thank you. Deputy Mayor, you mentioned that some services are very important to some, but not so important to others. And I guess one issue that really is an example of that is golf courses. And Joan has asked the question about golf courses.

Joan asked, why can some why can't some of the 13 council-owned golf courses not be sold off and used for things like housing development?

In fact, some could become nine holes instead of 18. And then Joan goes on to ask if these golf courses pay for themselves or do we actually use rates to help us keep them.

Peter?

Peter Gudsell:

Thank you David, and thank you Joan, and thanks for these quality of questions as well. There's some amazing questions coming through which I think are going into the heart of how we make decisions as a community and how you'll frame your feedback to come back in the way in which I described those criteria earlier, in which we look at our various options.

One of them was implementable and that's a key aspect with respect to golf courses.

A number of them have very long leases and would be difficult to manage any process around for this financial term.

However, if I take the question more broadly, council has almost $73 billion worth of assets. So that is a huge asset portfolio.

And we have an existing programme of reviewing these assets, trying to decide whether there are surplus assets that can be sold.

And there are existing asset sales targets within our budget already from memory in the order of $70 million per annum going forward for these sales.

And so we wouldn't be able to increase that for 23/24.

However, we will complete more detailed analysis on other asset opportunities of which golf courses would be a prime example.

And indeed, there has been paper provided to Governing Body within some of the material provided in forming up this current consultation document and that would support the long-term plan.

This would include development of the principles around which assets council should own.

Are they providing services that we must do under regulation or legal obligations are essential?

Are there things we should do because they're key priorities for council like climate action, transport, the environment, community development?

Are they "Could do?", with the things that deliver the most value or are they things that we won't do?

They don't align, they can be provided by others.

So those will form the criteria by which we will assess assets which may or may not be surplus, including golf courses. Your question around do they pay their own way?

I think that would be a very challenging space for golf courses to be in given their next highest alternative use.

And I think you mentioned housing within there and the interest costs that would be the opportunity cost of releasing the value of the golf courses would mean we could pay down a lot of debt and avoid a lot of interest costs.

I hope that's answered in a broad sense the golf courses aspect as it really does apply to all assets which could possibly be considered through a framework of are they surplus or essential.

Thank you, David.

David Gurney:

Thank you, Peter.

Of course, this budget does have quite a lot of tough decisions that need to be made in it.

And our chief executive, Jim Stabback, has signaled that there may be some impact on council staffing levels.

Claudia, we have a question here that has been asked to be directed to you. Will there be an FTE reduction, FTE being full time equivalent staff. Will there be an FTE reduction at council? And if so, what number is forecasted?

Dr Claudia Wyss:

Thank you very much for the question. And it's a question that's on the minds of many of our teams as well, and of course, our elected members.

At this stage, it's too early to know because what we have to do is, first of all, we have to assess and understand what the feedback is from our communities and ultimately what the final decision by our Governing Body will be.

Any staff cuts could come from several potential areas. For example, some of our regional services that have been put forward may be provided by some of our team members and therefore their roles may be impacted by the proposed changes.

Likewise, some of the local board decisions around their service provision or opening hours may have an effect as well. But it is too early to say. And we are really mindful of supporting our teams during this time because it is creating some uncertainty and our teams are very helpfully working through, providing our services, as usual, supporting our communities during this time of uncertainty.

So we are asking for patience while we can determine what those final impacts will be. And we're anticipating that those numbers may be more visible towards the end of the consultation period or when the final decision is made.

David Gurney:

Great. Thank you, Claudia.

So the next question I'm going to put to Ross Tucker, our GM of financial strategy. It's about airport shares. And the question is, if you sell the airport shares to reduce debt, why is there a need to increase debt?

And the airport share sale will raise $2 billion and our current deficits around about 295,000,000. Why do you need more levers?Why can't you use that airport share, the proceeds from that sale, to pay off that $295,000,000? Ross?

Ross Tucker:

Thanks for the question. I'll tackle the second. But first, why do we need to sell? Why doesn't that more than cover the gap? It's 295,000,000?

So the problem we have is the 295,000,000 gap. It's an annual gap. It's the difference between our annual income and annual expenditure. So it's not a one off 300 million packet, it's that kind of amount every year.

And in fact, if inflation interest stay higher increases, it could get bigger over time.

So it's about how do we get to a sustainable position where we have our savings over time?

So the proposal is to, you know, use the proceeds of some of what was used to pay down debt, to reduce our debt. And what that does for us is reduces our interest cost. So it reduces our interest costs by $87 million per annum every year.

And in fact, that rises to about $95 million over the next few years given the passive interest rates.

So it's about how do we get our accounts into a sustainable position? How do we do that every year? So that's why the proposal is not to sell the airport shares and use the cash, it's about using it paid on debt and reducing annual interest costs.

We will forego some dividends.

Over the last three years, we've had no dividends from the investment airports and that's largely because of COVID and closed borders.

But we are expecting that next financial year for you hold on to the shares, you might get about 40 million, but 40 million of dividends is a lot less than the 87 million of interest would save.

So it provides a net financial benefit.

I'm sorry, David, so it was the first part of the question again, just remind me.

David Gurney:

Sure. So the first part of the question is if you are selling the airport shares to reduce debt, why is there a need to increase debt?

Ross Tucker:

All right, okay, great question.

I think overall it's likely you could see debt reduce initially over time as we keep investing in the city will crack up again as investments, but compared to our plan, it will be a lot less than we have.

What we're talking about is using debt as a lever and it's about at the moment we've got a little bit less of the capital programme funded through debt than we could have under our policies.

We do use rates and current income to fund asset renewals.

So we've got a bit of scope within our existing financial policies to fund a little bit more of the asset renewals and other capex through debt rather than rates.

And what that does is free up some of that rates funding to help cover the budget shortfall. So there's an ability to use a bit more of that debt for the capital programme.

So what we're talking about is compared to the current plans, it's about using a little bit of extra debt on the capital programme, but we also kind of look at the equipment separately.

So then we will look at, well, how are we using the balance of rates and debt to cover the capital programme.

And then separately we've got the import shares question.

What we'll do, we'll do the final budget is we bring it all together and you'll likely see debt reduce over time, but it's about using a bit more of debt to fund the capital programme and free up the existing rates money that's coming in.

So it's about how do we use those mechanisms to balance the budget. Debt - we can use a bit of that - the problem is if we use too much debt to help balance the budget, it's going to be, it's not sustainable. We don't have that capacity in every year and if we're just kind of on borrowings, it's going to make the problem harder.

We might have to have higher rates increases next year and also the more debt we carry, the more interest cost that goes with it. So you just kind of compound the problem.

So debt can be part of, using debt versus rates, can be part of the solution a little bit in the short term separately to the interest savings we get from the airport shoes.

Hope that clarifies.

David Gurney:

Thank you, Ross.

So we're kind of dealing with a budget storm at the moment, but as everyone knows, Auckland in the last few weeks has been dealing with an actual weather storm and that's the cyclone. So we have a couple of questions relating to that and Peter, I'm going to put these questions to you.

So the first question, it asks, with the Natural and Water Quality Targeted Rates, shouldn't the council be investing more into climate change proofing programmes to ensure we're not impacted so badly like we were with the cyclone?

And then there is another question which is similar in a way, what priority has been given to environmental protection and conservation under these proposed cuts?

So Peter how would you respond to those questions?

Peter Gudsell:

Thank you, David.

I didn't quite see who put that question in, but thank you.

So yes, let's first take a moment to pause and reflect on those weather events that started on the 27 January hugely impactful for us as a region in terms of cost, in terms of life, in terms of anxiety and pressure and impact on our communities.

So I think we do recognise that and we should pause and recognise that in terms of what it means for climate change and climate action.

It's a very difficult question to answer in the short term and we consider that that is a long-term plan issue so that we have more opportunity to consider the implications of these weather events and the future propensity and need to address them for the storm events within this current budget.

We have recognised that there will be some impact. We have called out within the consultation document a number of pop-out boxes around those storm events that suggest we will need to reprioritise some of our capital spend and that capital spend towards renewals, for example, to fix some of the things that might need to be fixed that were damaged within those weather events.

And we've also included a proposal for your feedback to introduce a new operating budget.

So more revenue of around 20 million each year for storm response, noting that the rates increase for 23-24 may need to be around 1 per cent higher to pay for this and that's that 20 million equals 1 per cent of rates I talked to earlier as an explicit storm response.

With regard to the the Natural Environment Targeted Rate and the Water Quality Targeted Rate, we are not slowing down the spend, we are simply pausing some of the collection for that and within the long-term plan we can then readdress the feeling and need for climate response more generally.

So that's the answer on storm and those targeted rates.

David, the environment question and what priority has been given to environmental protection and conservation under these proposed cuts?

I don't really have that detail at hand to me. I would suggest that the best place to look for any potential impacts on that is in the consultation document and there's quite a degree of specificity around some of the specific proposals on pages nine onwards within that background document.

And Juliet, that should be able to allow you to understand any implications of this budget in the areas you're interested in and to provide the feedback to us on whether you consider that's appropriate.

David Gurney:

Thank you. Peter.

Yeah, I think it is good to note that on the AK Have Your Say site, there's a consultation document behind that is actually a lot of detailed information and supporting information, so I'd encourage people, if you want some more detail, to have a look at that supporting information too, in addition to the consultation document.

Hey Ross, we've got a question here about services, particularly those that have been reduced for next year, and we also have a question about libraries. So I'm going to start with Ross on the reduced services question and hand over to Claudia about the specific library's question.

The question is, what is the longer term outlook for cancelled or reduced services? Are they gone forever?

So, Ross, that's the question for you and then the specific question.

Libraries, I'll get clarity to follow up. It's just about how many libraries are expected to close as proposals are approved and Claudia I remember you mentioned reduced hours.

Ross, over to you about what happens to those services that we're reducing for this next year.

Ross Tucker:

Thanks for the question.

At one level, and I guess in a financial sense, what we need to do is look at that underlying balance between revenue and expenditure. So just reducing expenditure for one year won't solve the financial problem.

So to some extent we need to be looking at creating some enduring solutions so that when we reduce the expenditure, we don't just bring it all back the following year, otherwise we're just going to recreate the problem and have a bigger challenge for rates and other levers having to work harder the following year.

So we need to be thinking about how do we make it sustainable and avoid short term solutions so that might speak to some reductions may need to be more permanent rather than just three years.

That said, we will build our long-term plan - we start looking at that next year.

So every three years we refresh our 10 year budget and that's where we can have a more fundamental look about what are the priorities, what are the services we provide, what is council's role?

And it's where we can look at partnerships with central government and new ways to fund things and partnerships.

So there are through a long-term plan with a bit longer lead time and the time to investigate some things. We can make some funding, different choices and explore other options.

So some cuts - if we make the cuts and we lose specialist staff or we lose some capabilities that may make it tougher to gear up and realise in the future and it may take longer.

So that's probably a case-by-case thing.

Some will be quicker if it's just a grant that we would give to some organisation quick to reinstate. If it's really highly specialist technical expertise, it may take longer to rebuild that capability. So it is a bit of varies depending on which particular service we're talking about.

We need to be thinking about how we create long-term sustainable financial sustainability, but we do have that more fulsome strategic review just around the quarter.

Thank you.

David Gurney:

Thank you, Ross and Dr Wyss, about the specific effect on libraries and I think we have a question about Polyfest and continuation of that too.

Claudia Wyss:

Yes, Kia ora and thank you for that. Great answer, Ross.

In terms of the service provision for libraries and specifically, so what's informing the decision around the opening hours is currently the local boards have a proposed $16 million in savings that would come out of their local board budgets.

Those local board budgets essentially cover two areas. There is a Locally Developed Initiative (LDI) budget where allows for some operating expenses for specific localised programmes or grants.

And then there is the asset-based services budget which funds or tops up funding for some of the services that we provide in some of our assets or our facilities locally, such as our libraries.

Because the local boards are still working through their decisions about what their recommendations would be in terms of changing that lever on which lever they should pull, they're having to take each of those decisions on a local board by local board basis.

In other words, if the funding for LDI needs to be maintained, because that's their recommendation, then it may be that some of the funding might need to come from changing some of our opening hours at some of our facilities. And those opening hour reductions would then help reduce the cost of providing services.

There are no forecast closures to libraries that's not being proposed at this stage. What's been proposed is whether or not there needs to be a reduction in some of the opening hours.

Libraries across Auckland have a minimum service standard of 44 hours per week. What then happens is that some local boards top that up and then they offer a seven day service.

So what has been put forward is what would be the potential savings that local boards could think about if they reduced from, say, a seven-day service to a six-day service, that could help save some money and it might help free up the local board funding for some other priorities.

In terms of the Polyfest. I need to check my files on that, I'm afraid, because I don't have those direct answers. But I can come back to it if I can find it. And I'm sorry, I can't give you that answer at the moment.

David Gurney:

Thank you very much, Claudia.

Peter, we have a question about central government funding. Does central government contribute to all council funds at all?

Peter Gudsell:

Yes. Would you like a bit more? Okay. Yeah.

And some off the top of my head, David, because it's often quite hard to unpack.

Waka Kotahi is a huge contributor in the transport space. They subsidise and commit a huge amount of money into Auckland transports programmes. So they're very important.

The subsidies on public transport, for instance, some of the COVID aspects were really important and they've been assisting with contributions above the norm for some of the repairs recently as well.

Shovel-ready funding, which people might remember the term from a few years ago, we've still got some of that. They contributed into the Mayoral Relief Fund.

Probably one of the biggest aspects is half of the share of CRL, so there's a huge commitment to them from that.

And they also purchased a number of services and fund some areas within council as well, which would be far less obvious.

And an example of that that I can think of is actually water monitoring. So they actually purchased some of that services and support a number of our other initiatives.

So the short answer is yes. The long answer is much longer than some of the key examples I've just called out. I'm not sure if any of the other panelists want to add to that.

I'll just give them a minute in case they do.

Dr Claudia Wyss:

Well, I can probably possibly add some items as well.

Yes, some of our services and customer and community services are funded by central government. So that includes we get DIA funding for citizenship ceremonies, for example, and we also get funding for our Community and Social Innovation team.

So the Community and Social Innovation team receives NB funding for programmes such as Uptempo or Amal Thai. And those are programmes that help improve the opportunities for employment, for example, for Pacifica people or the opportunities for Māori businesses to gain contracts for procurement.

So those things are central government funded.

Deputy Mayor Desley Simpson:

David I was just going to add, being election year, this was the time for Aucklanders to tell us what they believe central government should fund to save the ratepayer funding it.

Because a lot of the things that we're talking about are things that a council, one of the amalgamated councils had funded in the past and they have just rolled over. So is it really a chance now to just rethink who should take the bill for some of these things?

And I know the mayor is very keen on talking to all interested parties about who's got the best deal for Auckland.

So that's part of the conversation as well. Thanks.

David Gurney:

Thank you, Deputy Mayor. We have about another ten minutes of questions left and I'm aware there are lots of questions that have been asked, so we apologise if we haven't got to your question tonight, but we are trying our best to work through them.

I know that we're acutely, as council officers, acutely aware of the impact of rates on people, especially in these financial conditions. And I know, Deputy Mayor, that councils are also acutely aware of that when they make their decisions.

This next question brings that really into focus. So, as a pensioner, my rates are already $5,225 a year and will increase to $5,550.

Under the plan, some people will be forced out of their homes by rates increases as they increase the 7 per cent.

Why should we have a policy of reducing rates for business while increasing rates for homeowners who cannot write off rate payments as a tax expense? Why should that take place?

Ross, you might be pretty well placed to start an answer to that question. Yes.

Ross Tucker:

So when we look at business rates, we do factor in the ability, the tax deductibility of those rates and that's kind of factored into the equation.

So, a few years back, the council looked at how much business rates can pay compared to residential. And the view was that business rates, even after factoring in things like deductibility, business rates were too high.

So a long-term strategy was agreed. So it was over a very long horizon. I think it's like 34, maybe later, when we kind of move to a point where we've got businesses paying what we think is a fair share after packing and deductibility.

The proposal at the moment is just for one year, pause that strategy so that the impact on businesses and residentials is equalised for a year.

Whether we continue that strategy, that that's a long-term financial policy, which is something that can be considered and debated if there's a political interest to do so through the next long-term plan.

So we've got a strategy at the moment. We've got a political position that business rates are too high, there's too much burden on businesses, which then has impacts in terms of employment and business.

But it is something that can be considered, but it's best done through a long-term plan and we need to council need to decide, doesn't want to continue with that strategy or variant.

So the proposal at the moment, given this annual budget, is just a one year focus on that.

Peter Gudsell:

If I could add on to that, David, and just to call out that superannuance with you know, rates in that order of $5,000 or above could qualify for rates rebate. The maximum is $700, and it depends on income.

We administer that for central government, and they could be eligible for that rate postponement. So please do take that opportunity if it applies to you.

David Gurney:

Thank you, Peter.

Okay, this next question is about local funding, especially to community groups in our communities. So Claudia, I'll ask you to respond to this question.

The question is, or can council proposes to cut funding regionally? How much local board funding will be available for community groups? And then this question has been asked.

On the other hand, if we're trying to save, does it make sense for council to give out grant funding?

Dr Claudia Wyss:

Those are excellent questions. Thank you, David, and thank you for the person who asked them.

So, in terms of the local board funding and what would be taken away potentially for local board funding, there is the $16 million that's being proposed for a local board savings would be equivalent to less than a 1 per cent rates increase.

The 16 per cent, though how that gets allocated across each local board is decided by each local board, and they're working through that and will be seeking consultation or feedback from communities in terms of how they should be allocating that money or those potential savings.

If they do not, for example, change opening hours of our facilities and all of the savings go onto the LDI, then it could, for some local boards, mean quite a significant reduction in LDI spending. And that LDI spending is where some of the local grants can come from or local grants funding, sorry, comes from.

It also means that some of those local arrangements may change and how the local boards may be funding some other areas or some other services in their areas that are not directly managed by council.

It's important to note that a lot of our grant recipients provide really important and highly valued services to Aucklanders and to our local communities via the local boards.

And we can provide grants either through the local boards directly, which is under the local board LDI funding, or we also fund grants for our regional budgets in terms of the relative value of that and whether or not we should even be giving out grants in this environment, that question is somewhat complex.

And the reason for it is some of our grants already have contractual commitments, and we need to continue those grants. And those grants provide funding for some very large scale services, but also some smaller multi-year funding.

And so the grants that have been put forward for potential savings are the ones that we can put forward due to the contractual ability to do so.

However, that's not to say that we don't value those grants or what the services that those grants provide, but we wanted to put it there for you.

It's a good opportunity for you to tell us, actually, which is a more important relative priority for you as an Aucklander. Are those grants or has the grants funding that's been put forward for savings? Does that make sense to you?

And then that information will be fed back to our elected members, who will then use the feedback to guide the ultimate decision at the governing body in June.

David Gurney:

Thank you, Claudia.

We're coming to the end of the time for questions, but I want to ask one more question.

There's a couple of questions coming through about the inorganic collection. So this is a question for, I think, probably Peter or Ross.

I'll get you two to find out the answer, but the questions are, are you intending to stop the annual inorganic collections or if the cost is not currently fully covered, to increase rates to cover the cost?

Ross, I saw Peter pointed to you.

Ross Tucker:

That one. I'm not the expert on our waste services, but my understanding is there are existing contracts in place for inorganic collection.

So we'd look at stopping that would be in terms of renegotiating and breaking contracts, which may make it an expensive exercise in terms of the cost sort of thing.

So across the waste services, there are a number of inflationary costs, there's a lot of labour costs, a lot of fuel costs.

And so, as part of this proposal, you'll see in the details of the budget documentation, there are some changes to the waste services overall, which is all based around a principle of full cost recovery.

So there are some costs are going up and some costs are going down. Overall is about a 10 per cent increase in some of those waste costs. And that's factored into the budget that's incorporated into the 4.66 per cent overall rates increase. So it's within those numbers.

There are some movements in the wasting, in the waste part of the rates that is driven by recovering the cost. So a lot of it is contracted services paid for by waste targeted rate or other mechanisms.

And so some of those costs need to be passed on.

David Gurney:

Great. Thank you, Ross.

As I said before, we've kind of come to the end of the chance to ask questions.

We've had a lot of questions through tonight and it's been fantastic to see the quality of those questions.

The thought that people are putting into this very important budget, it's very heartening as an Aucklander to see.

There will be some unanswered questions. We know that. And so our team are trying to put some of those questions together and they'll post responses up on AK Have your Say.

So if you ask the question and it hasn't been answered, please, in the next day or two, just have a look up at that website and you will see responses being put up to those questions that we haven't been able to answer.

Now, I'd like to close by asking for some reflections, really. So I'm going to ask Peter and Claudia first, but just for us, if they have any final comments they would like to make, and then I will pass over to the Deputy Mayor Desley Simpson, to add some final comments too.

So, Dr. Wyss, shall we start with you?

Dr Claudia Wyss:

Thank you, David. And thank you to everyone who's on the call for participating tonight, for listening to what is happening with the proposed annual budget, why we're in this position, what are the levers that we can pull as an organisation, but more importantly, you can guide us all as Aucklanders.

It is not an easy budget to develop or to implement, and we very much value your say, so please do have your say.

There are a lot of options that we've really carefully considered as we've put this forward.

It's not been easy for our teams or our organisation, but it is important that we have a balanced budget and we very much appreciate your advice, your help and your feedback.

So I'd like to thank you for being with us tonight and I look forward to hearing your feedback as it then ultimately shapes the advice to our elected members so that the governing body can make the decision in June.

Thank you, David.

David Gurney:

Thank you, Claudia and, Peter, Peter Gudsell, chief financial officer. It's pretty tough job to have it this time.

Would you like to make some final comments?

Peter Gudsell:

Thank you, David.

Look, I think everyone's got a tough job at the moment. Everyone in council, everyone outside of council, everyone's facing challenges. So that's just a reflection of where we are.

Also a reflection, I think, for everyone on this call, whether we be a panelist or not, that we're all part of our community and we should all put in our feedback.

So thank you for the opportunity to say something.

The first thing I'd say is it's really important that we have a budget. It does seem a strange thing to be focused on, given everything else that is going on, but in uncertain times, it's more important than ever that you have a plan and that it's credible.

Auckland Council and what it does for the city, for the region, is incredibly important and we want to get it right. So the council is facing a substantial operating challenge for next year and beyond. A mix of levers will need to be employed to address this.

The final mix is going to have to represent a credible and sustainable plan. The levers, they need to be implementable within that short time frame and they need to avoid unacceptable shocks to ratepayers both now and in the future.

So balancing and juggling those chainsaws is a bit of a challenge and we'll need your feedback to get it right.

The limited use of debt is proposed to be part of the mix, but if we have too much of that, it's going to create greater challenges for future budgets.

Opex reductions will play a key part, but the proposed changes are limited to implementable ones, some more fundamental potential changes can be looked at as part of that next long term plan process, the sale of airport shares.

It's a credible lever that would reduce the reliance on the other levers and reducing debt in a time of rising interest rates would be a prudent thing to do.

That would increase external stakeholders confidence in the council's financial management approach.

So while challenging and unpopular rates, increases are also proposed as a key budget lever and provide benefits for 23/24 and future years, they are one of those sustainable levers.

So what now needs to happen is we look forward to your feedback. We look forward to your feedback on telling us whether you consider that the proposed mix of levers provide a credible and sustainable solution to the challenge presented when considering the factors noted above.

Peter Gudsell:

We also look forward to your feedback that says something to the contrary and provides us other options that could be considered that meet that mix and solve for our $295,000,000 issue as well.

So thank you for the opportunity to express those thoughts, David, and I'll pass back to you.

David Gurney:

Thank you very much, Peter.

Deputy Mayor Simpson, you steered us through the financial challenges of COVID and here we are again. We're facing more financial challenges moving forward. I'm wondering if you would like to make your final comments about this budget.

Deputy Mayor Desley Simpson:

Thank you, David.

I think the common thread here is it's going to be a very tough job and it's going to be some really tough decisions that the mayor and the councillors have to make. And local boards are input into that as well. It's tough for them.

They have to find their 5 per cent saving and make a contribution. And a lot of that community, that local stuff that we've heard talk about in this session is really important.

The mayor says he's here to fix Auckland. And I think this budget, in my words, is like a bit of medicine. It's something that we're going to have to swallow and take on board and load something together that works for us and it's not going to please everybody.

I've said it before, I don't like it myself and I know the mayor doesn't, and I know that the local boards don't like it, but at the end of the day, it's a whole lot of little things that will make up something that will take us through that budget deficit and work.

I think one of the things I think that Peter said in his summary closing was really important.

Is there something we haven't thought of? Is there a way that you believe that we can find extra savings that you think may save the things that you want to keep in this budget?

Many, many heads make light work or whatever it is, many cooks. I think that's really important.

I think one of the most valuable things that we learn listening to Aucklanders is other ideas to solve the problem. So that's a really important point.

I also encourage you to talk to your friends and families and colleagues and encourage them to have their say too.

Now, you're here listening tonight, but there are other opportunities. There are face to face meetings, in person meetings. You can phone in and have your say and there's written and online feedback.

So, please, our big ask to you is to please let us know what you think.

I want you to know that there is no intention just to put it through. Regardless of what people think, there will probably be a lot of negotiation around this about things that should stay or go or increase or decrease. So it's really important that as many people as possible have their say. And as I've said, there's a variety of ways to do so.

So thank you for your time this evening and please have your say.

David Gurney:

Thank you, Deputy Mayor Simpson some tough decisions to be made and it's vitally important, I think, this round, that we get as much feedback as we can from the public.

So I really encourage all of you in the audience to go to akhaveyoursay.nz/budget before 11:00pm on Tuesday 28 March, to have your say.

Make a submission to this process.

I'd like to finish by thanking all the staff on the call. There's a lot of people who work to put these webinars together. So thank you to you.

Thank you. Particularly to Dr. Wyss, Peter Gutzel, Ross Tucker. You've been in the hot seat answering a lot of these questions, so thank you very much for answering them.

Councilor Simpson, it's always a pleasure. So thank you very much for participating in this workshop, for answering questions too.

But most importantly, I want to thank the audience. Taking time to learn about the issue, to think about them and to ask them really great questions, it helps us without thinking.

But also, it's a really important time to have a say and be involved.

So, on that note, thank you very much for attending Kia ora koutou.

[Video ends}

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