[Holding slide on screen that says, “Balancing the Budget – have we got it right?” Online information session, Monday 13 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, Claudia Wyss all on screen in front of Annual Budget 2023/2024 Ak Have Your Say background.

David Gurney:

Good evening, everyone. Tena Kotu. I'm David Gurney.

Head of strategy and planning for Auckland Council, and I'm facilitating tonight's conversation about the 2023/2024 Auckland Council budget. Thank you for joining us for tonight's important conversation.

The purpose of tonight's session is to talk about our proposals for the 2023/2024 budget. It's an opportunity to ask questions virtually, to hear from our finance team.

It's not an opportunity to provide feedback, but you can do that on our AK Have Your Say website.

Consultation runs from 28 February through to 28 March, and further information, including the feedback form, and you can give your feedback, can be found at akhaveyoursay.nz/budget.

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

To start, we'll just run through a few housekeeping notes and some reminders on Zoom Etiquette. So, this session is being recorded and it will be available on AK Have Your Say in the next few days. All members of the audience will have their cameras and microphones, disabled, but you can ask questions via the Q and A function.

Please note that due to time constraints, we may not get through all the questions tonight. But please be please rest assured that we will try and answer all of your questions on AK Have Your Say later. So, there will be frequently asked questions and answers posted on that AK Have Your Say site.

The other thing to note is that we want this to be a safe environment for the conversation. So please keep your questions and comments respectful and on topic.

So, any questions that are disrespectful or off topic will be dismissed.

Joining the discussion. Tonight, we have our panellists. So, we have deputy mayor councillor Desley Simpson. We have Dr. Claudia Wyss, our director of customer and community services. We have Peter Gudsell, our group chief financial officer. And we have Ross Tucker, our general manager of financial strategy and planning.

There will be about 90 minutes this session, and the format will be a presentation from our finance team, followed by Q and A. So, you'll have the opportunity to ask questions using the Q and A function.

We have a limited amount of time to get through. If you think so, please ask you to keep your questions to the point.

So, without further ado, let's kick the evening off, starting with a message from our mayor, Wayne Brown.

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

Mayor Wayne Brown:

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 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, Claudia Wyss all on screen in front of Annual Budget 2023/2024 Ak Have Your Say backgrounds.]

David Gurney:

Great. I'd like to thank the mayor for that video. Deputy Mayor Simpson. I recall that you have said that this is probably the most important budget that Auckland Council has ever faced.

I'm just wondering if you'd like to add some more comments to what we heard from the mayor.

Deputy Mayor Desley Simpson:

Thank you, David. Look, I thought last term was bad, and we always knew this budget would be very challenging. But actually, we've got a combination of factors. I was going to say the perfect storm, although that's not in a good analogy to use these days. That's really contributed to this $295,000,000 shortfall.

I think the biggest of all is inflation.

The cost of materials to build, fix or replace anything has gone up considerably. But the law dictates that we have to put together a balanced budget. We cannot leave any of that gap, or we have to close it one way or another.

So, to do that, we have to respond by using all the tools at our disposal.

The mayor touched on the airport shares. Look, our shareholding is worth around 2 billion. But despite that, as a council and as a community at large, we cannot influence the Auckland International Airport Board's decisions in any way, nor can we influence the direction of the airport or control how much they decide we should get from holding our shareholding. Council has a prudent amount of debt, even though it's eye wateringly large, but that allows us to build infrastructure for future generations.

We are actually well within our debt limit, and we have a high credit rating from the agencies who monitor us.

However, by selling the airport shares, we can reduce that debt and our interest costs, which are only going up at the moment, by around $87 million a year. And we're saying to you, do you agree with that?

Another key point of the mayor's budget is to continue our work in reducing costs within the council family.

Since Auckland Council was put together, we have saved somewhere in the vicinity of $2.4 billion dollars, so it's not as if we haven't saved any money to date, although there is more than we can do in that space. But the finding of those savings gets tougher as every year goes on.

So, we are proposing, well, the Mayor is proposing a programme of additional spending restraint, and our staff will cover that off shortly.

So, finally, the other big common one that we all know about is rates. We are proposing a small rates increase overall, but less than the rate inflation. And it's worth noting that our income from rates, including all the targeted rates, is only 37% of our income.

So, we are very good at getting other income from other sources. We don't require that gap or that everything to be paid for by the ratepayer.

However, we do have to be mindful of the cost-of-living crisis and not to hit our residents too hard with more cost increases.

So, we're asking you, is our rates rise pitched correctly, or could it possibly be more?

So, I urge you to listen carefully tonight, read our consultation material, and then it's over to you, because we want to hear your views.

Now, I know that there will be things in this budget that you don't like. There are things in the budget I don't like. However, the key is to solve that shortfall and then hear from you as to what are the things you believe we absolutely need to keep and the things that we could potentially forego.

We need to hear your opinion about the alternatives that we should consider instead.

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

I'll now hand back to you, David, to take it from there.

Thank you.

David Gurney:

Thank you, Deputy Mayor Simpson. Yes, there are lots of tough choices to be made and lots of options. So, thank you very much for your interview.

I'd just like to remind people that, please, if you have a question when you're listening to some of these presentations, please put it into the Q and A box at the bottom of the window, and we will get to answering your questions very soon.

But first, we'd like to play a video that's been put together by our finance team, which is just a final overview of some of the options that we had to get through this budget. So, I'll ask for that video to be taken up.

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

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 thank the finance team for putting that presentation together.

As you'll see, there's a wide mix of options that the council is proposing to balance the budget, but all these options have trade-offs and it's quite complicated. So, I'd encourage everyone today to go and look in the consultation documents which can be found on the AK Have Your Say website, especially pages 12 to 17, which outlines those options and how they interrelate together.

We'll now move into the question/answer part of the session. And Peter, I'll hand over to you.

There are a lot of options we're considering, and one of those options has been picked up by Megan, who has asked a question about the natural environment type of rates.

So, Megan notes that while there are sufficient natural environment type of rate reserves to prop up spending at its current levels for this coming financial year, Megan is interested in what happens the year after.

Megan also asks about why all those natural environment rates weren't spent in the year they were raised.

And finally, she asked about if we excluded the reductions to the natural environment and water quality target rates, what impact would that have on the overall rate increase?

Peter, over to you.

Peter Gudsell:

Thank you, David. And thank you, Megan, for the question.

David, keep a track of whether I answer all three of those because I may get lost along the way, but I'll try and start with the easy parts of that and then work backwards into exploration of options.

Page 53 of the consultation document that you just referenced, David, that has a really good explanation of the natural environment targeted rate and the water quality targeted rate as well. Why it was introduced to tackle the spread of kauri die back disease and of predators and the water quality targeted rate to bring forward our 30-year plan to clean up Auckland's beaches, harbours, streams and aquifer.

So, the revenue collected from them has resulted in some reserve funds of 33 million for the Water Quality Targeted Rate and 20 million for the Natural Environment Targeted Rate.

Now, we don't spend those every year because a number of the expenditure items within that or the projects that it's spent on are quite lumpy in nature. So, the funds are collected and then they are spent down on.

An example of that, speaking to our head of the INES area, Environmental services, is the 1080 drop in the Hunuas.

So, you don't always spend those funds within the year.

If I move on to the amount of the reduction from pausing them for a year and they are paused for a year rather than stopped, so that allows the programme to continue.

They reduce rates for an average residential property by around $77.

Now, that is reducing the rates that you would pay from about 7% down to the 4.66 that you see discussed in the consultation document. So, it's around 2.33% is the difference in rates due to pausing those two targeted rates for one year.

We would need to return those targeted rates to their full level in 24/25 so that the programmes can continue within their planning timeframes.

So that's the Natural Environment Targeted Rate in isolation and hopefully covers off the questions with them there.

However, the key aspect of any one particular part of the budget package is the fact that it's a package and that there are a number of criteria we use to inform the mix of different levers or ways in which we can meet that 295 shortfall. So, they have to be, we've got four criteria they have to be credible, sustainable, affordable and implementable.

So, to be credible, they've got to build confidence, they've got to build confidence in the Council's financial management with ratepayers’ residents, communities, businesses and investors.

We've got to have ongoing solutions in terms of sustainability, so we don't contribute to a larger budget challenge.

They have to be affordable, so they avoid unreasonable costs or shocks for ratepayers now and in the future.

And substantial rates increases for the next year could create affordability challenges for some ratepayers. We heard about the cost-of-living crisis mentioned earlier by both the Mayor and Deputy Mayor and they have to be implementable so they have to be able to be achieved by 1 July so they can help close the gap within those years.

Now, not all of those four criteria are mutually reinforcing. Some of them are in conflict with each other and hence the mix of levers that we have across spending cuts, rates, increases, asset sales and debt aren't necessarily a balanced use of all of those levers across those four criteria.

The Natural Environment Targeted Rate is one way of pausing that for one year, maintaining the programme, using the reserves and ensuring that what we come up with is a balanced programme that meets that affordability criteria in the main.

So, a bit of a long-winded answer David, but I think I wanted to take it a wee bit further than natural environment targeted rate. I'll pass back to you.

David Gurney:

Thank you. Peter and I checked off those three.

Of course, we will have to make some quite hard choices about what we spend money on.

So, Dr. Wyss, I've got a question here for you.

The question is a lot of the funding proposals appear to impact more of our cultural or social-facing events or functions. How has this been factored into thinking about the proposals?

Dr Claudia Wyss:

Thank you for the question, David, and thank you to the member of the public who asked it.

So perhaps I'll just start at a very big picture level.

When this budget gap was identified, what our teams then did is had a look at, well, how do we close that gap? And that's where those four levers were pulled in.

So, it's not only the service cuts that were proposed, but it's also a larger number of priorities that we proposed to try to achieve this balanced budget.

What we've also done is we've really looked in house at council, how effectively we're operating and what more changes we can make, and not only within council, but of course, with our CCO partners.

So, it's been a diverse number of areas that we've looked into.

The challenge that we're left with then is how do we close the gap in the next financial year? And as you just heard from Peter, it has to be achievable. We have to try to put forward items for saving that can start from 1 July. And those unfortunately, are quite limited.

So, what we're faced with is that many of our arrangements that we might have that could create savings are limited to what we can achieve in the next year because of contractual restrictions or legal restraints that we may have on being able to pull forward some savings into the next financial year.

So that is why we've looked at or had to put forward ideas around savings within grants or some of our programmes. And while we're very mindful about the impact that those can have on our communities, we were, I'm afraid, quite constrained in what we could put forward. They could have that impact on that one-year opportunity.

Now, the challenge we have or the opportunity we then have for the future is we can look at how we deliver services more strategically in the future, particularly around the communities that need us most or some of how we deliver our services.

But the ability to inform and change those in the next year is quite constrained because we only have a short time frame until the 1st of July.

Therefore, the real ability for us to look at how we prioritise our services and how do we support some of those communities that may need us most, that is going to be part of that long term plan/process which also is starting very soon through local board engagement but does not occur until next financial year.

So, when we're in the next financial year, we will be starting that long term plan process.

But until then, we do have some limitations on what savings we can put forward. And, I'm afraid as a result of that, and our contractual constraints, we are limited to what we could suggest.

Now, this does give you an opportunity to give your feedback.

If, for example, you're suggesting, no, we don't want those levers to be pulled, we would like these levers to be pulled instead. That is exactly part of this process where you can have your say as part of AK Have Your Say, and we would encourage you to do so.

David Gurney:

Thank you very much Claudia. The next question is I'll be putting this to Deputy Mayor Simpson, but it's about why do we not have an offer of higher rates?

The person who asked the question would like to know what extras we get for a 6% rise and an 8% rise or a 10% rise.

Before you answer Deputy Mayor, I do know that behind the consultation document, there's a bit more detail in the supporting information.

So, if you have a look at AK Have Your Say, supporting information on that site on page 38. There's apparently some information about different kinds of rate scenarios.

But Deputy Mayor, why aren't we giving kind of more information on what more or less rates might provide?

Deputy Mayor Desley Simpson:

I thank you, David.

Look, I think the mayor's thinking initially was that he was very concerned about the potential cost of living increase with food, cost of petrol, people's, mortgages being refinanced, et cetera.

But we have included in the supporting material other rates options, and I do urge people to have a look at them.

I'll briefly go through them now and then give some context.

So, although we talk about a 4.66% rates rise, it's actually a 7% rates rise. A 7% rates rise, which has been reduced down to 4.66 due to us pausing those two targeted rates.

Now, that gives us an additional $71 million.

And that 4.66% is approximately, for the average Auckland residential rate payer, an extra $144.

Now, if we were to raise that from the 7% to 10%, that would mean we would get an additional $133,000,000. And instead of netting a 4.66 increase, it would net a 7.22% increase, which would cost the average Auckland residential rate payer an extra $238 or $4.60 a week.

And if we were to go right back to the original, which is the whole cost of general rates increase, the 13.5%, it would net us another 204,000,000.

Net rates rise would be a 10% rates increase or 10.21% rates increase and an extra $336 a year for the average Auckland residential rate payer, or $650 a week.

Now, what I've asked staff to do is to tell every local board area what those extra costs would mean for them, for their average residential rate payer and their business rate payer.

And that information is going out, I understand, next week latest.

And so local boards will be able to share that information to their local communities, but the other rates increase options are actually there in the supporting document for you to have a look at.

Thank you.

David Gurney:

Thank you very much. Deputy Mayor.

The next question I'd like to put to Ross Tucker, and one of the, I guess the bigger proposals in this budget is the potential to maybe sell off Auckland Council's shareholding in Auckland International Airport.

So, Ross, one of the questions asks about what was the rationale originally behind council's ownership of the equal shares and what are the benefits - practical or ideological - of continuing to hold them versus the benefits of selling them?

Ross Tucker:

Thank you.

So, the reason open council holds those shares is largely for historic reasons. That's how it came about.

So, prior to 1988, the Auckland airport was run by the Auckland Regional Authority.

In 1988, the government created a company called Auckland International Airport Limited. The government was the major shareholder and in the various councils around Auckland were given they were given shareholding proportions within that company.

Ten years later, in 1998, the government decided to sell its majority shareholding and then a number of the councils sold shares, Auckland City Council sold part of its shares, but held on to a portion, and Manukau City Council held onto a portion as well.

So, Auckland Council, when it was formed in 2010, inherited those shareholders from Manukau and Auckland City Council.

So, it's come about from a time when airports were created by the public sector, and run as public sector entities.

But now it's been incorporatised and council's are just holding a minority shareholding.

The majority of the airport is owned by private investors. You can go buy shares on the stock exchange. So, it's now a private company that the majority is privately owned.

In terms of what are the benefits, we've done a thorough assessment as part of this proposal.

There's two parts. In the practical sense we looked at the financial benefits, but in terms of that - the ideological part of it - we've looked at, well, what are there any potential strategic benefits of council owning shares in the airport?

But there's no doubt that the airport itself is a strategic asset for Auckland and for the country. It's infrastructure that needs to be provided. We need to have an international airport or a national gateway.

But the question is, does the council need to own a share of that, a small minority share, in order for that to function as an international gateway, or would the private sector provide that anyway?

So, you can look at that and go, well, the private sector, it has the motivation and incentives to run that as an efficient piece of infrastructure.

So, then you can look at other things.

Is there an airport, it might be a monopoly? Are there controls on monopoly pricing? But we have a Commerce Commission that can set the tools to regulate any competitive behaviour you look at.

Well, does council need to own it to make sure that it's, you know, there's no inappropriate foreign investment? But we've got an overseas investment office that has those criteria and actively looks at those kinds of proposals about overseas investment.

So, there's lots of controls already. And because council only owns 18%, it doesn't have a lot of control, it can't make any decisions or influence major strategic decisions. And most of the things we might want to consider, there's already government controls in place.

So, our assessment is there aren't a lot of strategic reasons/rationales for council to continue to maintain a minority shareholding.

So, it sort of comes down to a financial investment, which is the interest when our proposal is to sell the shares and pay down $1.9 billion of debt and that creates an ongoing interest savings.

On the other hand, we lose some dividends. So, I've done some maths and the interest we save is about 87 million per year. The dividends we forego next year forecast about 40 million.

So about $50 million every year better off by selling those shares and paying down debt.

So, in a practical sense, in a financial sense, we think it makes sense in a strategic sense, in a strategic ideological sense, we don't think it's a strong, compelling case for council to continue to own them.

Thanks David.

David Gurney:

Thank you, Ross.

Earlier in the session, we invited the audience to provide their feedback on AK heavy stay and one of the things we said was provide feedback on the options and the proposal, but also put your mind to different ways we could save money or raise revenue.

And Peter, David has been putting his mind through some of these different ways of maybe raising revenue.

David's question is, has the council considered target rates on things such as congestion in terms of a congestion tax or a landfill waste tax which align with council objectives and would generate revenue?

Over to you, Peter.

Peter Gudsell:

Thank you. Thank you, David.

So we also got asked at one point about targeted rates with respect to the storm event, and it's an easy answer on the storm event.

It happened, the weather events that began on the 27 January, they turned up so late in the piece and we're still assessing the damage from them and the ongoing costs.

So, you will see within the, within the material, some call out bubbles on the storm events and proposal was in there for your feedback on increasing and creating a fund for proactive and reactive storm response of around 20 million and 20 million is around another 1% in general rates.

The timing of that and I am getting to targeted rates, precluded us including that as a targeted rate because of the process, you have to go in to get a targeted rate, put in that's more a conversation for the long-term plan.

And that really does answer the first part of the question that you put to me, David, which is really around have we considered other ways of raising revenue?

The answer is yes. And you will have seen last year the creation of the Climate Action targeted rate for exactly that rationale.

Now, the targeted rate is called targeted because it has the spend attached to it as well. So, while it raises revenue, it's directly offset by the cost that it is spent on.

So, it doesn't raise additional revenue and doesn't necessarily cover off any operating gap if it is simply creating more costs at the same time.

So hence, yes, continually looking at targeted rate, but more as an element of transparency than as a method for creating revenue that covers off already existing costs and closes an operating gap. Thanks, David.

David Gurney:

Thank you, Peter.

Of course, it's understandable that people are concerned about the impact this budget will have on services into the community.

So, Dr. Wyss, we have a question about libraries, and will any libraries have to close as a result of this budget?

Dr Claudia Wyss:

Kia ora David and thank you for the question.

So we don't foresee that any libraries will have to close, but I will just give you some bigger context as well to help perhaps develop that understanding of what is being put forward and what levers the local boards may have at their disposal should they want to identify other ways of providing savings for this budget.

So, there are there's about 20 million that's been put forward for regional savings and then there's another 16 million that has been put forward for potential local board savings.

Now, the local boards have two ways of identifying savings. They can do that through their LDI, which stands for Locally Driven Initiatives.

Those are quite flexible initiatives that provide for operating expenses, such as grants or local events, and that can constitute a large proportion of the potential savings.

But should they only put forward those savings, then it could be quite a large component of the locally driven initiative budget.

The other lever, therefore, that the local boards can use is the Asset Based Services lever.

So, what this means is that some local boards, they top up the minimum number of hours that our libraries provide and need to provide as part of the regional strategy.

So, under the governing body requirements, the minimum library hours are 44 hours a week and six days a week.

What then happens is that some local boards, they top that up and they add hours so that some libraries are available seven days a week.

What the local board may do is they may decide when they look at their various levers that are available to them, they may decide that it could be worthwhile bringing back those library hours to sit within the regional requirement of 44 hours a week.

And therefore, that may reduce the opening hours of that library. But what it won't do is result in a closure.

There are some other services that may be also affected by those opening hour changes and that could affect some of our arts facilities or some of our other community hubs.

And some services may be asked to pull back entirely from being council run so that those savings can be achieved.

It's very difficult to understand at this stage what that would look like on a local basis because those local boards are currently working through the materials that are available and the options that are available to them, and they're also holding engagement events with their communities.

So, I would encourage you to please talk to your local board or participate in one of those engagement events so that you can understand or give your feedback on what may happen locally.

But a lot of those decisions around opening hours will be sitting with the local boards.

There are opening hour decisions that are also occurring within Tataki. So, for example, that might affect some of the zoo or the art gallery opening hours. And so those are also available for consultation.

So sorry, it's a long-winded answer, but I hope that gives you a little bit more context.

David Gurney:

Thank you, Dr. Wyss, I think you actually answer Andy's question as well, which is all about local board decision making. So, thank you for that.

Ross I'm going to put this next question to you.

So, of course, one of the hard things about choices, about services, some services are very dear to some people's hearts and not so dear to others. And I guess golf courses is that one issue where there are lots of people, it's very important to them and for others, they think that it uses other services.

So, the question is, why haven't we looked at selling off golf courses?

Why has this been ignored in favour of cuts that impacts communities most at risk?

Pretty tough question, Ross.

Ross Tucker:

That's a tough question. I guess, stepping back, we've only got so many options we can use to solve a budget challenge.

He's looking at rates, he's looking at reducing services, Opex cuts, looking at capital investment, using a bit of debt, and the other one is looking at assets.

So, looking at assets across the board is a key part of the strategy. That's the airport shares I talked about earlier, but we've had an ongoing programme over recent years of looking at all of our property portfolio.

What are surplus assets? Assets council might have acquired in the past for transport purposes that are no longer needed, or we might have built a new library and got an old building that is no longer being used, all those kinds of things.

So, it's been a programme of over time to look at all of the assets, and council's total asset portfolio it's around is almost $70 billion.

So, we're talking about quite a large number of assets.

And the more work we can do to find more and more assets to look at, consider for selling, that can be a helpful part of the process.

The problem is a lot of the easy one on the low hanging fruit, the bits of property are just sitting there are not being used.

We've already looked at, we've sold, we're in the process of looking to sell, so we need to look a bit broader.

It does take time.

Golf courses are some of the larger value items on that broader list.

Golf courses are a bit tricky in terms of there's a lot of things to consider.

What does council need to do in terms of providing golf courses? What do golfers need across the city, what the local communities want in terms of the visual amenity, the use of that? What benefits do we get from those golf courses?

So, there is work underway around the future of golf strategy that looks at what is it that golfers need and have we got the right kind of assets, what does council, what should be provided, what should council's role be and what should council own as part of that?

But there are a range of those broader considerations around everything to do with golf courses, and one of which financial perspective is some long-term leases.

Some of the golf courses are very long leases that can go up to 90 years.

So, you've got some pretty complex things.

Others are more short term and will come up with lease in a much shorter time frame.

So, lots of things to work through. For this annual budget, what we're really focused on is decisions that we can put in place by 1 July this year.

So, golf courses is a potential thing that could be looked at, but it will take time to work through those kind of considering all the levels of provision, what we need to do, looking at leases, looking at all the different community perspectives around those things, there's quite a few things to look at. It will take longer.

There might be something that we can come back and look at in terms of our next ten-year budget and looking at some of the longer term financial challenges. But we just thought that was just too hard to be able to progress that right now and make decisions to get things sold for the 1 July this year kind of time frame.

Thank you.

David Gurney:

Thank you, Ross.

Councillor Simpson, Hannah has just asked a question about the 4.66% rates increase. 4.66 sounds like a very exact number.

So, Hannah's saying, I'm curious about how the 4.66% rates increase was landed upon, are there any specific metrics that informed that number that might help us understand its relevance and appropriateness?

Deputy Mayor Desley Simpson:

Look, I can't speak for the mayor, but my understanding is that he was very conscious that this is an annual plan. Right?

It's a tweak of what we call the ten year or the long-term plan, which had an agreed rates rise of 3.5% for this year.

And so he sort of wanted to keep a rates rise that was affordable, as I have mentioned before, and others have mentioned, with the cost of living, et cetera, but also not too high, bearing in mind what his understanding was, Aucklander’s had agreed would be the rates rise for this next year.

So it was, for one of a better word, a percent higher.

But that's not to say it will stay there. And he's very open to listening to Aucklanders around that.

But the formula was really, well, we know that the LTP had for the year rates rise of 3.5%. He was kind of keen to keep it not too high with a net vicinity, but also knew about the large 295 gap and he had to balance it all.

I think the other key point is a point I've made before about being very conscious that the ratepayer wasn't going to pick up the slack, that savings had to be part of that, and that we were sort of keeping that 37% income percentage from rates as being kind of constant and not making 50, 60, 70% of that income coming from the rate payer.

David Gurney:

Thank you, Deputy Mayor Simpson.

Of course, one of the more controversial items, I guess, or one that we're getting a lot of feedback on, is changes to the funding for the citizens of Advice Bureau.

So, Dr. Wyss, I'm wondering if you would be able to answer this question.

So, the question is, I believe that the citizens of Advice Bureau provides a very good return on investment for Auckland Council by resolving problems before they become much worse.

What kind of return would Auckland Council consider to be a good return when funding community services?

Dr Claudia Wyss:

Thank you for the question. So, it's a very good question and it's actually quite challenging to answer.

So, I'll just quickly talk about CABX and why that was put forward, or Citizens Advice Bureau sorry for the acronym.

And then I'll talk a little bit about the return-on-investment considerations.

So, in terms of the Citizens Advice Bureau, part of the reasoning why that was put forward is that, as mentioned earlier, there is a legal ability or contractual ability for us to put that forward to review the funding that is provided to the Citizens Advice Bureau each year.

And the other premise to this is that some of the Citizens Advice Bureau services that are provided, quite a significant proportion of those, are also used to support central government activities.

And in fact, a study that was done in 2020 showed that only 2% of Citizens Advice Bureau services were there to support true local government services.

Now, that does not mean to say that we don't value those services nor gain a benefit from those services.

But it is quite an important aspect for the community to consider is what proportion do you see is relevant for Auckland council to fund given the fact that some of the services may be also there to support the central government activities and central government functions.

And that was, I believe, the premise of why that was put forward as part of the mayor’s proposal is the concept of, well, what is Auckland Council doing that should perhaps be more funded by central government versus what should Auckland Council continue to fund as part of its rates programme?

Now, in terms of the return on investment, well, there's a number of items that Auckland council considers from a return of investment standpoint.

At the very largest aspect, we consider the Auckland Plan, and we have a look at the four well-beings and there's a really important component around the four well-beings of social, economic, environment and cultural wellbeing. And those are the very big items that we look at.

But then what we also look at when we get to quite detailed levels is the number of customers that we serve, what is the cost per customer that we serve, what is the implications of not serving those communities and what could the downstream risks be?

And in this instance, we may see some downstream risks and so those things need to be carefully considered.

We would need to have a look at, well, how do we mitigate those risks and understand what we can do at council to mitigate those risks?

But it may be that we need to have a look should that funding not be supported to stay in the budget. We may need to look at alternatives or may need to hold those discussions with central government to be able to support that funding gap.

So, it's not an easy answer, I'm afraid, and it's certainly not an easy situation to bring forward into the annual budget, but we are restricted on what options we can put forward given those legal and contractual constraints that we have.

So, thank you very much for the question.

David Gurney:

Thank you, Doctor Wyss.

Deputy Mayor Simpson, just picking up on part of what Claudia asked there about central government and the role they play with the local government.

Judy is interested in whether, Judy says, I believe that central government provides a 6% contribution to Auckland's budget.

Has the mayor had discussions with the local government minister and the Minister for Auckland to increase his contribution?

Deputy Mayor Desley Simpson:

Yes, look, that's a really good question.

I can absolutely confirm that the mayor has had conversations with many parties, including the current government and opposition parties around what are they promising Auckland come October this year?

He's had one-on-one meetings with them all and he is pleading a very good case for investment back into Auckland.

I can't tell you the absolute outcome of those discussions, but they are absolutely being had with a view to being, look, we are a third of New Zealand. We are responsible for a lot of the economic benefit for this country, and we need to work together for the betterment of progress for Auckland and for New Zealand.

So those conversations are actually being had used differently.

David Gurney:

Thank you, Deputy Mayor Simpson.

Peter, we're having a few questions about kind of the costs of council facilities and the opportunity that might come from raising fees and fines, et cetera.

So, there are a couple of questions that I'll put both to you.

First is about council facility.

First asks, council facilities such as parking and venue hire are often cheaper than private providers.

What contributions do these provide, and could these prices be increased?

And then in a more detailed question, Angie asks about CCO such as Auckland transport.

If they increase fine payments, the cost of parking on the streets, how would these changes impact the annual budget for Auckland Council?

Peter, what thought has been put into maybe increasing some of the prices for council services?

Peter Gudsell:

Thank you, David. And also thank you for the very good question.

I'll answer it in a couple of parts.

Fines are something that is usually set by regulation, and we can't actually increase the fines unilaterally ourselves.

Similarly, if we wanted to introduce congestion type of fees or congestion charge, that's also something that we're not allowed to do under the current legislative requirement. However, fees for council services, whether they be CCO's or ourselves, they can be set in a number of ways.

Some of them are market, some of them are cost recovery. An example of a cost recovery service might be the building consents or resource consents area or getting a Land Information Memorandum from council so we can recover our costs fairly there.

Other aspects you mentioned venues and parking, et cetera. If I take an example of Auckland Transport and Auckland Transport optimising both its parking revenue and also its parking outcomes, that will lead to a difference in how much funding is required from council.

So, it has the ability to make choices in those revenue areas that will allow it to both achieve its outcomes for parking and for use of buses as a part of that and public transport, and also to impact upon its revenue and as such, the funding that council has to pay it.

Other areas - we very much do look at contestability and price comparability across our venues and our services as well.

But we're also very mindful of those four criteria we mentioned earlier, and affordability. So, there's always a trade off in these.

But yes, please rest assured that fees and charges are things that I looked at to make sure that we can contend that they're appropriate.

Thanks, David.

David Gurney:

Thank you, Peter.

Deputy Mayor Desley Simpson:

David, can I just add to that? Is that possible?

David Gurney:

Sure.

Deputy Mayor Desley Simpson:

Sorry to butt in, but I just want to touch on the congestion charging aspect.

We started that discussion with Central Government last term and my understanding is that hasn't gone away.

The problem we have is the implementable aspect to this budget. It has to be ready to go on the 1 July and we're not there yet, so good question.

It's work in progress, but we're not there yet.

Sorry, Dave.

David Gurney:

That's fine. Thank you, Deputy Mayor, for that expansion.

Okay, the next question is about in the budget, $20 million has been put to the response for the storm event that happened a few weeks ago.

Ross, would you now just give us a bit more information on what that $20 million for storm response might be funding?

Ross Tucker:

Sure, happy to.

There is detail and supporting information if you want to go online and there's a consultation document and then there's a supporting information behind it. Page 24 sets out that proposal.

But in essence, what it is, it's got two parts to it.

It's making sure we have the resources available to respond to a storm event, a major event when it happens, and that we can put in place all of the emergency response that we need. Have an evacuation centre, all of the things that we've seen that people have had to scramble around and put in place in response to the flooding event and the cyclone, including waste disposal and people going in there and checking to make sure buildings are safe.

It's basically putting the budget in place that has makes sure that we are better prepared to respond when these things happen.

The other bit is in the more preparation phase, what can we do ahead of another storm or climate impact type event to make sure we're better placed?

And that can include things like more frequent cleaning of stormwater drains, including drains, and the road transport corridors as well.

So how do we make sure we're better prepared?

We minimise the risks ahead of the events and responds to it after the event.

So, what's happening financially, I guess, at the moment, is we have an event and then we have a bunch of costs.

This puts in place a budget deliberately ahead of time so we can be proactive ahead of the event and be more responsive, knowing that we've got the money, we've got everything set up to respond.

So, it's really all about increasing Auckland Council's ability to prepare for and respond to future events.

So, the 20 million fund is all about those operating costs, those ongoing costs and being prepared that is kind of separate to the infrastructure costs around fixing damaged assets or rebuilding assets to make them more climate resilient.

That's more in the Capex space and probably mainly over a longer-term time frame. Hopefully that answers the question.

David Gurney:

Thank you, Ross. Thank you, Ross.

Peter, earlier in the session we heard from Hannah about the airport shares, but I have quite a few more questions about the airport, so I might return to that topic for a little while.

Sandra has asked the question, if we were already well within our debt level, why are we selling a long term assets such as airport shares to handle an inflationary year.

And Phyllis is also asking about the return on investment from Auckland Airport prior to COVID lockdown and a loss of tourism.

Is the return of international tourism likely to have an impact on the value of this asset? And is now the right time to sell?

Over to you, Peter.

Peter Gudsell:

Sorry, Dave, can you repeat the first question?

David Gurney:

Yes sure.

Peter Gudsell:

I got the second one.

David Gurney:

Yes. So, the first question is from Sandra. If we are already well within our debt level, why sell a long-term assets, such as the airport shares to handle an inflationary year?

Peter Gudsell:

Okay, thank you very much.

So, if we think about the first one, we're within our debt level, but it's the opportunity cost of the capital that's tied up or the debt that we could release from sale of that airport of the airport shares, which is the item that is being placed out there for feedback.

So, if we were to sell the airport shares in totality and release 1.9 billion from our debt, we would save the interest costs. Those interest costs are more than the dividends that have been projected out into the future.

Now, that also goes to the ROI question because, yes, there was that little pandemic disruption and that did impact upon the airport, and we will see more international tourists and touch-wood, the sooner the better.

However, what we have based our assessment on that shows that the interest saving is greater than the dividends is the market analysts who look at this every day, who explore and assess the dividend streams that is likely from that market dynamic of the international tourists coming back.

So, taking all of that into account, the interest savings outweigh the dividends, as explained by Ross earlier, something in the order of 88 million of interest savings versus 47/48 million of dividend streams.

So, great questions. ROI is exactly how we've thought about it. And even though we're within our debt limit, the opportunity cost of holding it is quite significant and would be better to release it from a financial sense.

Thanks, David.

David Gurney:

Great. Thank you very much, Peter.

I'm aware I keep handing you quite difficult and multifaceted questions, so you're answering them very well.

Claudia, this next one for you. And the question is any increase to any public cost will push some people over the edge.

What plan does the council have to look after more homeless within Auckland once these changes happen?

Dr Claudia Wyss:

Thank you, David.

And so, for those who may not be aware of what's being put forward as part of the regional grant, saving is the Homelessness Coordination Grant, which is a non-contestable grant, but that is used to fund organisations such as LifeWise, Vision West, Maori Wardens, and to implement Auckland Council's Homelessness Strategy. So that's a grant of about $615,000.

The challenge, again, that we are and have been faced with is that in order to meet the financial gap that we have, and in order to be able to contribute to the operating cost savings, this one is one of those items that has been put forward as a potential saving.

No decision has been made yet, so it is still very subject to feedback that we're getting from our communities and that may then shape the ultimate decision that has been made by the governing body in June.

It is a very challenging situation, and we don't know what the potential impacts would be.

So, we need to keep a very close eye on those levels of support that are provided to our communities.

What is perhaps also good to know is that we do support our homelessness community in a number of ways.

And there are a number of incredible providers out there, partners who support our homelessness community, for example, the Auckland City Mission, but also our homelessness community or rough sleeping community use a number of our facilities and sites such as library sites for Wi-Fi access and those things would continue to be provided or anticipated to continue to be provided subject to the perhaps the opening hours changes.

So, it's difficult to know at this stage the potential impact.

And we would encourage you, if you do know or if you have specific concerns, to be able to please provide feedback as part of this consultation process.

David Gurney:

Thank you, Claudia.

Okay, the next question I'll ask to you, Peter, it's from Phyllis.

And Phyllis asks, did you consider reducing the wage and employee related costs of council rather than reducing services?

Peter Gudsell:

Thank you, Phyllis. Yeah, that's an excellent question.

And David, I might be able to remember this one, so I'll just get into it.

Phyllis absolutely. In fact, I would say that it has been probably the first place that has been looked at before others. So, there's been a real need and desire to ensure that council looks at itself before looking further and out into the community.

Look, if I could be really quite open, there will be staff impacts from this budget.

We're already working on shared services and other back-office initiatives that are going to see some job reductions.

They're not particularly visible, but they are impactful. There's about 125,000,000 across council and our group that we are doing by reducing operating spending.

A lot of that comes down to people and staff, as you've mentioned.

We don't know the scale of reductions from the matters that are being consulted on, but there's no doubt jobs are going to be impacted.

Operating expenditure on staff is primarily a quantity is a function of the quantity and quality of the services delivered and how those services are delivered.

So those budget reductions are increasingly impacting service levels and therefore we're going to have further staff reductions and they're going to have further service impacts. In terms of what we are doing anyway, because we have some consultation out there but there are some things that we can get on with.

Simplify the way we work and that's including our management structure to be more efficient. We're addressing unnecessary duplication while improving service and efficiency. So, I've mentioned back-office.

Support for elected members is getting a good look at simplifying our processes and changing some of our processes and credit control, procurement. Some structure changes and I mentioned duplication before. Accelerating shared services so we can leverage the group more.

Streamline some of our activities and continue with spending and recruitment constraints as well.

So, I've unfortunately been in the paper, which is not a place I like being. However, that was on the back of a need to manage our cost base and be really careful on what we spend.

We've also been really mindful in council parent, and I know the CCO's have also been careful about recruitment. We don't want to put an impost on our community and ratepayers unnecessarily.

So, we've been taking a really good hard look at ourselves.

So, Phyllis, I hope that answers the question because we're a part of a community, we take this area seriously and we're certainly looking at ourselves first.

Thanks, David.

David Gurney:

Thank you, Peter.

We only have time for one or two more questions, so if you've asked the question and we haven't answered it yet, I just wanted to remind you that all the unanswered questions we will be providing more information on Ak Have Your Say.

So please don't be anxious if you haven't answered your question. We will endeavour to do so through the AK Have Your Say site later.

Deputy Mayor Simpson, this question I'm putting to you because ultimately, you're asking a staff member about value for money and through these kinds of processes.

So, the question is, can you please explain the need for urgency to adopt a one-year budget to address long-term deficits?

How much council resourcing has gone into developing this budget?

Are Auckland rate payers getting good value for money through this process?

Deputy Mayor Desley Simpson:

Right, well, that's a big question.

It's not so much an urgency issue, even though the urgency bit is the fact that we have to find the $295,000,000 shortfall.

But our budget is part of a statutory process that, by law, we have to land a budget that is credible, sustainable, affordable and implementable by the 1 July.

Now it has to balance. We can't leave the jigsaw with one piece missing.

So, the urgency is to meet the statutory deadline.

It's pretty much online with every other annual budget time frame that we've had, give or take.

And the other thing to really be mindful of, although it's an annual plan and one year, the decisions that we make in this year actually reflect how we're placed in the year after and the year after that.

So, it's not as if it's a one year fixed necessarily. If we do pretty much nothing this year, we're just going to have a bigger problem down the road.

Look, as far as the staff resources that have come into this, I don't know whether you're aware. But the Mayor puts up a budget.

He does that with his mayoral staff, in conjunction with council staff, but he puts up a draft budget.

It goes to councillor’s, who in the main, let that budget go out for consultation in its pure form.

And then what happens is that we listen to that feedback, the mayor listens to that feedback. He discusses it with councillors.

He comes then back with a redone budget, which could be different in a number of areas, some small amount of areas or a large amount of areas, and then that's given to his full council, including local boards, to have their say back on that final budget.

I think that pretty much answered it, David.

But it's not a rush through process. It's a process that we follow pretty much every year until unless it's an LTP year - a long-term plan year.

David Gurney:

Thank you very much, Deputy Mayor.

Dr. Wyss, there's a question here about funding cuts to social cultural activities and the impact that might have on different communities.

So, the question is, has the social and cultural funding cuts considered the outlet they provide for use and how that gives them positive things to do?

Dr Claudia Wyss:

So, the short answer to that is yes, it has considered it.

The challenging answer that we have is to meet the budget shortfall. Under the current levers that have been discussed, there are some potential cuts that could occur to some of the youth funding, so, for example, some youth funding grants, but also some activities for youth in the leisure space.

And so those things could have a potential impact.

There are some items that are not being included in the budget cuts, such as Santa parades and some other events. So, there are still activities for youth out there. Of course, we still have our pools and leisure centres, and there are still other ways that youth can engage with council services and activities through that and through libraries.

So, there could be a, hopefully small, impact on some of the youth programmes, but some of those savings do constitute some of the youth grant programmes. Yes, indeed.

[01:18:34.610] - David Gurney

Thank you, Claudia.

Well, I think that is all the time we have for questions and answers.

I'd like to thank the audience for some wonderful questions. The breadth of issues we've covered tonight shows the thought that people are putting into this very important budget. So, thank you very much.

I'd like to start by asking Peter and Claudia to give their summary of what they've heard tonight and add any final comments.

And then later we'll close with Deputy Mayor Simpson.

But Peter, from the chief financial officer perspective, I'm wondering if you would be able to provide some closing comments.

Peter Gudsell:

Thank you, David. And hopefully Dr. Wyss gets to speak longer this time. Her battery much ran out on the first session, so she had to move very quickly, but on the assumption that she's sorted, I shall just spend a couple of minutes concluding.

I think the key point for me is the council is facing a substantial operating challenge for the 23/24 year and beyond and a mix of levers that we need to be employed to address this.

The final mix must present a credible and sustainable plan. The levers need to be implementable within the required time frame and avoid unacceptable shocks to ratepayers both now and then into the future.

We have a limited use of debt as part of the proposal in the mix, but too much debt creates greater challenges for future budgets and would be inappropriate.

Opex reductions also play a part, and you've heard me talk to some of those, but the proposed changes are limited to those that we can implement in the time frame.

Some more fundamental potential challenges that have come up today are best looked at and shall be looked at as part of the long-term plan process.

The sale of airport shares will that as a credible lever, that would reduce our reliance on other levers. Reducing debt in a time of rising interest rates would be a prudent thing to do. It would increase external stakeholders’ confidence in our financial management approach, for instance.

And while challenging and generally unpopular rates, increases are proposed as a key budget lever as well. And they provide benefits for the 23/24 year, but are quite sustainable as they provide benefits for future years as well.

So, we're looking forward to your feedback to see whether you consider that the proposed mix of levers provides a credible and sustainable solution to the challenge presented when considering all the factors that we've noted above.

I would refer you to the documents they're really quite readable, particularly the consultation document summary. It's made deliberately so. So please have a look and please have your say.

And now I'll pass, David rather than back to you, directly to Ross and hope I haven't stolen too much of what he wanted to say before we move on from there.

Ross Tucker:

Okay, thank you.

I'll keep it short.

Through this budget, we've got a budget challenge, almost $300 million for next year that we have to solve. We've got to find a way to solve that.

If we don't, it's going to become harder and harder, as Deputy Mayor said, it's going to create bigger challenges.

It might be much bigger rates increases in following years if we don't do something about it.

It feels like today we've kind of answered a lot of your questions and try to give you lots of information, but this consultation process is really about us hearing from you.

What is the impact that these proposals on the community? We want to hear from the community. We want to hear from yourselves, people that know what's going on there.

You'll see it out there every day. You know what's going on.

So, the process is really about hearing from Aucklanders.

What do you think? If this isn't the best way or what is a better way?

We kind of set out the options and the constitution documents that Peter's talked about, and so we really want kind of your views on what is the best way to solve this challenge.

So back to you, David.

David Gurney:

Thank you, Ross.

Dr. Wyss, you've had some pretty gnarly questions to answer tonight. I'm just wondering if you have any closing comments you'd like to make.

Dr Claudia Wyss:

Thank you, David. And you can call me Claudia, which most people know.

Firstly, I'd just like to thank everyone who's been online. This is the second of our sessions, and we've really appreciated the ability to be able to connect with people's questions directly.

I know it's a difficult budget and we're very mindful it's a difficult budget and we are not trying to make it purposely difficult. We have a constraint that we're needing to work within and we're trying to find a very balanced approach to dealing with it.

This is, of course, the opportunity to have your say, as everyone has said already.

And we have faced some challenges in what we could put forward, including for some of our social services, by the fact that we're constrained through the legal or contractual arrangements that we have.

And those arrangements are very broad. They include many of our grant’s programmes that are multi year. We have peppercorn rentals that are multi-year. We have extensive contractor arrangements, including for all of our open space management that are very difficult for us to adjust in a short amount of time.

And so, we have been constrained by what we could put forward.

And of course, though subject to your feedback, those things may result in us having different levers that we pull.

So, if, for example, some items are less popular with Aucklanders than others, it may suggest that we need to bring forward perhaps that rates lever instead, instead of making some of the service cuts.

However, this is up to Aucklanders to have their say, so I would really encourage you to do so.

There's a number of ways that you can provide your input and that information will be collated and it will be provided back to the executive leadership team, but also, of course, most importantly, the governing body and our mayor to help inform the final decision.

So please do have your say. It really matters, and we are looking forward to hearing your views.

Thank you.

David Gurney:

Thank you, Claudia.

And Deputy Mayor Simpson, final comments from you.

Deputy Mayor Desley Simpson:

Well, I think I'm taking the same thread.

It's a very bitter pill to swallow this budget, and I think everybody has something that they don't like in it.

But suffice to say, we have to, by law, put together a budget that covers the shortfall.

Is there something that we haven't thought of that you think that we could save money in a better way?

I want to just reiterate once again that from a council's perspective, whilst saving money is something that we have done to date to the tune of about 2.4 billion, the low hanging fruit has been achieved and we now almost have to turn into giraffes and stretch a bit higher up.

And in doing that, we find some real tough choices.

Are they too tough? Are they not tough enough?

It's really important for you to have your say because I want to explain the process from now.

So, once you've had your say, all that information is collated, and it goes local board area by local board area to the local boards.

They look at the feedback from their areas and they make some recommendations to the mayor and the councillors, and then the mayor and the councillor’s look at all the feedback, including that from the local boards, and make a final recommendation.

Your view is important. It really is.

I think now, more than in any budget I've been part of, because so many people have found things that they don't like from different areas.

But if you do want to keep something that has been removed, please tell us where we should find the funding from.

You can't just take out one bit without replacing it from somewhere else.

It's going to be tough for us all, but please have a good look at all the material and if you've got any further questions, please ask them, either from the local board or from your local councillor.

And finally, I just want to remind you of that AK Have Your Say website, which of course is akhaveyoursay.nz/budget, and to make sure your feedback comes to us before 11.00pm On Tuesday, the 28 March.

Now, we have this forum, but we also have other in person opportunities for you to talk directly to your local board and/or councillor. And we have opportunities for you to have your say, even by phone.

There is, of course, the written option as well.

So, we have opportunities for you to have your say in many languages. We've tried to cover right across the board.

Auckland is a very diverse place and it's a city of many, many villages.

Your feedback on this budget is key to that final decision making.

Please Have Your Say and thank you for being part of Auckland in the next year.

David Gurney:

Thank you, Deputy Mayor very, very clear. Well set down there to provide feedback into this very important budget.

Just echoing and the Deputy Mayor, please give your feedback at akhaveyoursay.nz/budget and that has to be with us by the 28 March 2023.

I'd like to end by just thanking the staff who have been on the call. So, Claudia, Peter, Ross, thank you so much for answering all those questions.

I'd like to put out a call out to all of the staff who sit behind the scenes for these events. These are quite hard to pull together so well, done to those people.

Deputy Mayor Simpson, thank you so much for your time that you commit to these online sessions. It's wonderful hearing from you and thank you for participating.

And most importantly, thank you to the audience, to the members of the public. You are showing a great interest in Auckland.

Thank you for taking the time to learn about the options, and we look forward to receiving your feedback on this very important budget.

Thank you very much.

Pō mārie.

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