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[Video: Auckland Council’s Long-term Plan 2024-2034 logo with a navy-blue background and yellow 'AK Have Your Say' speech bubble appears]
[Video: a small video tile appears in the top-right corner with Toby Shepherd in front of the Auckland Council Long-term Plan 2024-2034 background.]
[Speaking: Toby Shepherd]
Kia ora, good evening.
Tena koutou, welcome.
My name is Toby Shepherd. I'm a manager at Auckland Council and I'll be facilitating this evening.
Thank you all for joining us for tonight's information session on Auckland Council's long-term plan for the 2024 to 2034 period. The purpose of tonight's session is for those of you who are joining us to learn some more about the council's proposals for the 24 to 34 budget for long-term plan.
A reminder that the consultation runs from the 28 February to 28 March and you can find more information including the feedback form at akhaveyoursay.co.nz/ourplan.
Tonight, the purpose is to ask some questions via the chat here on the Zoom and hear from some staff across the Auckland Council Group and we'll do our best to answer those questions.
Tonight we're not asking you to provide your feedback. To do that, please go to our website or come to a drop-in session. You can find sessions in your area online.
So, tonight's session will provide an overview of our proposal for the 2024 to 34 budget. Auckland Council's long-term plan consultation seeks your input on how the council should work to improve the daily lives of Aucklanders and how this work should be paid for.
Our proposal for the long-term plan would strengthen Auckland's physical and financial resilience while tackling some big budget challenges.
We've organised the LTP into seven areas of investment: transport, water, community, built and natural environments, economic and cultural development and how the council manages the organisation and supports elected members.
For the first time, the council has created options to do more or to do less and to pay more and to pay less, as well as a central proposal, and we want your feedback to help us decide about options in each of those areas.
Before we get under way, a few housekeeping notes and a bit of Zoom etiquette.
The session is being recorded and it will be available on akhaveyoursay.nz/ourplan and we'll get that up there in the next few days. All members of the audience do have their cameras and microphones disabled and we have staff on-hand who can unmute and come online, and we can see them with their cameras on, to answer your questions.
Members of the audience can ask questions via the Q and A function, so that's inside the Zoom meeting that we're in now. And just note that due to how much time that we have, we might not get to all of the questions.
We'll do our best, for those that we don't get to. We'll do our best to answer those and also put those answers up online at the akhaveyoursay.nz/ourplan address. And just a reminder that any comments or questions that are disrespectful or that are off topic, we'll just be dismissing those and not carrying them through to the speakers.
So, joining the discussion tonight are the Deputy Mayor, Councillor Desley Simpson, welcome.
Nicola Mills, who is our Group Chief Financial Officer, welcome Nicola.
Ross Tucker, who is the General Manager for Financial Strategy and Planning, welcome Ross.
Tamsyn Machett, who is the Programme Manager in our Financial Strategy and Planning area.
Nicola, Ross and Tamsyn are from our Finance Directorate.
And finally, Justine Hayes, who is the General Manager from the Regional Services and Strategy, which is our Customer and Community Directorate, so welcome Justine.
Tonight's session will take about 90 minutes. The format will be a presentation about the long-term plan and then question and answers where you'll have the opportunity to ask those through the Q & A function. If you can do your best to please remember to keep those questions short and succinct.
That'll really help us answer your specific question and help us get the most out of the time that we have together tonight. And as I say, if we don't get to all the questions, we'll do our best to answer those and pop them online in the next few days.
So, with that introduction, welcome again and we are going to kick off the evening with a message from Mayor Wayne Brown. Thank you, Mr Mayor.
[Video: recording of Mayor Wayne Brown with Auckland City and harbour in the background.]
[Speaking: Wayne Brown]
Kia ora tatou.
Auckland faces some big challenges over the next decade. Auckland anniversary floods and Cyclone Gabrielle caused damage across the region.
One year on, the impact for our communities. As a city, we will still be recovering for others in years to come. These devastating events have shown that we have strengthened the financial and physical resilience of our region.
If we want to reduce the impact of future shocks for Auckland households and businesses, we need to think seriously about reducing the city's exposure to risk. We shouldn't just be relying on ratepayers to cover the cost of disasters. The long-term plan provides an opportunity for us to rethink the way we do things and reassess what matters most to Aucklanders in the wake of unprecedented events.
Many Auckland householders are really feeling the pinch in this cost-of-living crisis. We're talking about big cost increases year after year, with the result that more people are struggling to pay their mortgages and make their living expenses and taking on more debt to bridge the gap.
Local government is not immune to these pressures. In the past, Auckland Council has relied on debt to bridge funding gaps and committed to government mega-projects while underfunding the renewal core assets like roads, pipes and community buildings.
The removal of Auckland's Regional Fuel Tax will leave an estimated shortfall of $1.2 billion in transport funding. The full impact of the government's water reform is yet to come. And there are several hefty, unavoidable bills ahead, including the City Rail Link and the ongoing storm recovery.
Nevertheless, I am determined to put Auckland Council in a better financial position.
As we develop a long-term plan, we have to focus on areas where we will have the most impact. We need to get back to basics, get things done better, faster and cheaper, and finish what we've already started.
My priorities remain the same, fix Auckland's infrastructure, stop wasting money, get Auckland moving, take back control of council organisations, and make the most of our harbours and environment.
Auckland ratepayers deserve better value for money from the public services and activities, and more competitive returns from public investments, which will help keep rates as low as possible.
We all have difficult decisions to make. In the past, council staff have led development of the long-term plan, but this year process was led by our councillors, local board chairs and members of the independent Maori Statutory Board, along with myself.
We're doing things differently. Our central proposal has gone to the public consultation with options to do less or do more with the understanding that doing more will cost more for Auckland ratepayers.
I want to thank you in advance for having your say on Auckland's long-term plan. We'll listen to what matters most to Aucklanders.
The decisions we make today will shape our city over the next decade. So let's fix Auckland.
Tena koutou, tena koutou, tena koutou katoa.
[Video: Auckland Council Long-term Plan 2024-2034 background with smaller video showing Toby Shepherd in the top-right corner.]
[Speaking: Toby Shepherd]
Thank you, Mr Mayor, and just an apology from us to the audience there with the audio challenges at the start, you do your best, but technology always makes things tricky.
Deputy Mayor, Desley Simpson, do you have any initial comments or thoughts in just hearing that message from the mayor?
[Video: Auckland Council Long-term Plan 2024-2034 background with video tile of Deputy Mayor, Councillor Desley Simpson in the top right corner.]
[Speaking: Desley Simpson]
Thanks, Toby.
No, look, my purpose tonight really is just to listen to the people of Auckland, to listen to the questions that they're asking, noting that this is an information session and just making sure everything is respectful for both staff and Aucklanders. So I'm here to listen.
[Video: Auckland Council Long-term Plan 2024-2034 background with video tile of Toby Shepherd in the top right corner.]
[Speaking: Toby Shepherd]
Lovely. Great to have you along.
We will now have a short presentation with a bit more detail about what's sitting inside the long-term plan.
Just a reminder that as you're listening to the presentation, it might be a good time to enter some questions into the Q & A function. So you can do that as the video is playing. If you keep those short and sharp, we can do our best to answer those when we come back to the Q & A session. So we'll just move over now to the presentation by our finance team.
[Video: illustrated background of Auckland images with video tile of Tamsyn Matchett in the top-right corner.]
[Video: illustrated slide appears on the screen asking, 'What is the Long-term Plan'? with Toby Shepherd talking in the top-right corner. The questions is answered: Auckland Council’s long-term plan sets out how our council will work to shape and improve Tāmaki Makaurau over the next 10 years. This plan is developed by the Mayor and councillors, and our consultation document is your opportunity to have your say on it. There is a lot to consider and some big decisions to make. Please read more about our proposal and the choices available in our consultation document. Then give your feedback at akhaveyoursay.nz/ourplan.]
[Speaking: Tamsyn Matchett]
Kia ora, Toby and tēnā koutou katoa. Welcome and ngā mihi kia koutou to all of you joining us this evening.
So, the focus of this webinar is of course our long-term plan. The long-term plan is a key accountability document for Auckland Council that sets out what we will invest in and how we will fund it across the next 10 years. So, in a sense it sets our direction and lays out our priorities for Tāmaki Makaurau.
It's a process that is led and determined by the mayor and our councillors, but of course they want to know your views and your thoughts on the proposals, which is why we're here in the second week of consultation talking to you.
There is a lot to consider and some big decisions to make. After this webinar, we really encourage you to go to akhaveyoursay.nz/ourplan to read more about the proposals, and of course to provide your feedback, next slide thanks.
[Video slide: a new illustrated slide appears on the screen with Tamsyn in top-right corner. The text says, Consultation: our proposal for the next 10-years strikes a balance between providing a central level of service that makes do with what we have, and spending more where it is needed most.]
[video slide: Our plan includes $39.3 billion of capital investment and $72.0 billion of operating spend over 10 years.]
[Video slide: We could do more or do less than our central proposal.]
[Video slide: Doing less will cost less but will mean stopping or reducing some activities and service levels or slowing down improvements.]
[Video slide: Doing more - such as speeding up investment in transport services and climate resilience - will cost more.]
So, this LTP for 2024-2034 is all about choices. Within the consultation material you will read about our central proposal, which seeks to strike a balance between providing a core level of service that makes do with what we have while spending more where it is needed most.
We could do more, or we could do less than what is outlined under the central proposal.
Doing less will cost the ratepayer less but will require stopping or reducing some activities or services.
Doing more, such as speeding up investment in transport and climate resilience, will cost more. Next slide thanks.
[Video slide: the next slide appears on the screen. The text on the slide says: What is the problem we are solving? Adapting to economic fluctuations, paying for growth, rising cost of asset ownership, storm responses and resilience, a limited funding system. Direction: the development of LTP has been directed by the mayor and councillors. This includes the mayor setting a vision, outlining a focus for the LTP on the role of Auckland Council, the mayor and councillors defining our priorities and establishing our focus.]
It's important to think about the context that sits behind these proposals. What challenges do we face both as an organisation and as a city? Auckland Council faces several financial challenges like higher inflation, a growing population, rising costs of our assets, that's maintaining and renewing our infrastructure, and the continued support and the cost associated with storm recovery.
As a group of organisations, we also have to contend with a limited funding system, as in: the number of tools available to us to fund and finance our activities is limited.
And of course, as a region we need to consider how we become more physically resilient and more climate responsive. Next slide, thanks.
[Video slide: the next slide appears on the screen. The text on the slide says: What's in the central proposal? Central proposal: under our proposal the annual rates increase for the average-value residential property is set at: 7.5 per cent in year one, 3.5 per cent in year two, 8.0 per cent in year three and no more than 3.5 per cent for the years after that.]
As mentioned earlier, there's a central proposal that looks to strengthen Auckland's physical and financial resilience while tackling some big budget challenges. The proposal is to make do with the assets we have, the resources we own and the services and activities we provide, while spending more where it is needed most, like on storm recovery and to improve transport across the region.
Under this proposal, our investment levels would be $39.3 billion for capital investment and $72 billion for our operating spending.
Overall rates increases for the average-value residential property across the first three years would be 7.5 per cent in year one, 3.5 per cent in year two and 8 per cent in year three. Following slide thank you.
[Video slide: the next slide appears on the screen. The text on the slide says: What might get more mean? Pay more and get more: with higher rate increases would enable us to deliver more and better services levels than is possible under our central proposal, but would require higher level of rates and debt, including rates increases up to 14 per cent for residential rate payers in the first year.]
[Video slide: Paying more to get more could see average rates increases for residential ratepayers rise by up to: 14 per cent in year one, 10 per cent in year two, 10 per cent in year three, five per cent for the years after that. This includes speeding up investment in transport services and climate resilience.]
There are alternatives, of course to our central proposal. A pay more, get more scenario would significantly increase activities and services and speed up delivery of investments. For example, the transport capital spend would increase from $13.4 billion under the central proposal to $24 billion.
However, this would cost more overall increases for the average value residential property would be up to 14 per cent in year one and 10 per cent in years two and three.
The capital investment levels would be $52 billion for capex and $76.5 billion for operating spending. Next slide thanks.
[Video slide: the next slide appears on the screen. The text on the slide says: What might get less mean? Pay less, get less with lower rates increases and less use of debt but would require cuts to some activities and service levels, or slowing down improvements, compared to the central proposal. Pay less and get less: Paying less to get less could limit average rates increases for residential ratepayers to as low as 5.5 per cent in year one, 3.5 per cent in year two and 3.5 per cent in year three with no more than one per cent above CPI inflation thereafter. This will require cuts to some service levels or will slow down improvements.]
Pay less scenario would mean a significant reduction to activities and services, focusing primarily on meeting our statutory or legally required minimums. For example, the transport capital spend would reduce from $13.4 billion to $11 billion.
Overall increases for the average residential property would be 5.5 per cent in year one, 3.5 per cent in years two and three.
The capital investment levels would be $33.5 billion and $69.2 billion for operating spending. Next slide thank you.
[Video slide: the next slide appears on the screen. The text on the slide says: Council services: for each area we explain the level of service you can expect to receive from our central proposal, and the different options and trade-offs. Our performance measures framework outlines how we measure our performance.]
[Video slide: We provide an outline of trade-off options in seven areas of council-funded services and activities: transport, water, parks and community, city and local development, environmental management and regulation, economic and cultural development, council support.]
So, throughout the consultation material, which is available online, there is further information on these options.
So, across the central, pay more or less scenarios and those options are detailed around those individual investment areas that were mentioned before.
So, by providing this detail across these investment areas, think water, community services, transport etc., we're hoping this provides you with the ability to give us feedback that is less binary, that provides you with more choices. Next slide.
[Video slide: the next slide appears on the screen. The text on the slide says: Auckland Future Fund: overview of Auckland Future Fund, our proposed option and other options for consideration, assessment of options, implications of options, advantages and disadvantages of options.]
Auckland Council is also proposing changes to its two major shareholdings to increase its long-term physical and financial resilience. The proposal is for a wealth fund, what we're calling an Auckland Future Fund, established with funding from our remaining Auckland International Airport shares as well as the proceeds of granting a 35-year operating lease to operate the ports of Auckland.
By doing this, the council could improve its long-term financial position and make the most of these two strategic assets.
Changes are proposed to the ownership and control of the council shareholdings in the airport company and the operations of the ports. But all port land and wharves would remain in council ownership.
Because the objectives of the fund would be to diversify risk, it is almost certain that most, if not all of the airport shares would be sold over time.
The financial benefits of the proposal would help reduce the need for higher rates increases over the next few years. Next slide, thank you.
[Video slide: nest slide appears. The text on the slide says: Port of Auckland. Our long-term plan proposes to make the most of our waterfront by freeing up the Captain Cook and Marsden wharves from the use of the Port of Auckland. There are also options for Bledisloe Terminal.]
Whether or not the operation of the Port of Auckland is leased, our long-term plan proposes that we make the most of our waterfront by freeing up the Captain Cook and Marsden wharves from being used by the Port of Auckland.
The port operations that happen now on these wharves would transfer to the Bledisloe Terminal and legal ownership of the wharves would be transferred to council in two to five years, freeing the wharves up for alternative uses.
There is also a slower option to transfer the Bledisloe Terminal to be freed up for alternative uses and transfer the council ownership within a longer time frame, around 15 years.
This proposal recognises that Aucklanders want prime waterfront land released back to the public so we can make the most of the Waitematā Harbour, at the heart of the city centre. Next slide, thank you.
[Video slide: the next slide appears on the screen. The text on the slide says: Transport Plan: we plan to make public transport faster, more reliable and easier to use. This includes the council’s significant investment in the City Rail Link and other large rapid transit network projects. But there are also options to do more or do less.]
The long-term plan proposes working with the government to progress towards an integrated transport plan for Auckland. We are proposing a total transport capital spend of $13.4 billion over 10 years to make public transport faster, more reliable and easier to use.
This would mean investing in rapid transport actions such as network optimisation, reducing temporary traffic management requirements and introducing dynamic lanes, making it easier to pay through changes like capped weekly public transport passes also.
A key priority for transport is making the most of our existing assets and what we plan to spend, including the council's significant investment in the City Rail Link and other large rapid transport network projects.
But of course, as I said earlier, there are options to do more or to do less. Next slide, thank you.
[Video slide: the next slide appears on the screen. The text on the slide says: Your rates.]
In the consultation material we have a full section on rates. Information is provided on the three different scenarios, central, more or less, and we include information on targeted rates, waste management services and the long-term differential strategy. That's the strategy that sets out the share of general rates paid by business and other ratepayers. Next slide, thank you.
[Video slide: the next slide appears on the screen. The text on the slide says: Other matters: North Harbour Stadium Precinct, Tūpuna Maunga Authority Operational Plan 2024/2025.]
We have a few other matters we are also consulting on, like the future of the North Harbour Stadium precinct and the Tupuna Maunga Authorities plan for 2024 to 2025.
For more details on these proposals, please do head along to akhaveyoursay.nz/ourplan. Next slide, thank you.
[Video slide: the next slide appears on the screen. The text on slide says: Fairer funding for local boards: our proposal is to move to a fairer allocation of funding for local boards for their local community services.]
We have lots of information on our 21 local boards and their proposed priorities for their local communities.
In the same section, within our consultation document, we also include information on the fairer funding for local boards proposal. This is a proposal to move to a fairer allocation of funding for local boards for their local community services. Next slide.
[Video slide: the next slide appears on the screen. The text on the slide says: How to have your say: It’s important we hear from all of our communities, so there are a variety of ways to Have Your Say.]
[Video slide: These include written and online forms, face-to-face events, phone, social media, and webinar options.]
[Video slide: Translated summaries are available in: Te Reo, Korean, Samoan, Tongan, Simplified Chinese, Hindi, Traditional Chinese and Easy Read.]
[Video slide: You can give us your feedback until 11.59 PM on 28 March 2024. For more information, including extensive supporting information for the consultation document, you can visit akhaveyoursay.nz/ourplan, phone 09 301 0101 or visit your service centre or library.]
[Video slide: Final decisions will be made in June 2024 and the adopted Long-term Plan 2024- 2034 will be available on aucklandcouncil.govt.nz in July 2024.]
It's super important that we hear from you, your friends and your whānau. If you head to our web page, you will find a schedule of events, both local and regional, summary documents that are translated into a range of languages, and more information to support your engagement with this long-term plan consultation.
You can provide feedback right up until 11:59pm on 28 March. So please make sure that you make the most of that opportunity and send us your views. Next slide, thank you.
[Video slide: the next slide appears on the screen showing an image of the consultation feedback form with the text: How to have your say.]
This is the feedback form. It provides lots of opportunity for you to give your views on all the things I've covered this evening. And you will find this on our web page or at any LTP event or our libraries if you would like a hard copy.
[Video slide: last slide appears on the screen of an Auckland landscape.]
And I think the final slide from me? Great, thank you.
Yeah, just finally, a really big thank you to everyone who is joining us. We look forward to responding to your questions and hopefully providing you with more detail that will help inform your feedback on this long-term plan.
Ngā mihi ki a koutou and back to you, Toby.
[Video: Auckland Council Long-term Plan 2024-2034 background with video image of Toby Shepherd in the top-right corner.]
[Speaking: Toby Shepherd]
Kia ora Tam, thank you so much.
I think it's really evident that this LTP in particular is a really large one, where there are lots of topics with lots of detail to them. And evenings like tonight are a chance to get into the detail of what's proposed.
So, Tam's just taken us through quite a complex long-term plan and one that covers lots of different areas and asks us to think about lots of different trade-offs and options. So if there is anything we can clarify, that's the purpose of this evening.
And as Tam said, we've really tried not to make things [*missing word here]. We've tried to make the long-term plan consultation less binary, provide more information, look at options. In particular, we have that central proposal, a pay more , do more and a pay less, do less.
Excuse me, everything is moving around on my screen, not sure why?
And so that is designed to enable you, as Aucklanders, to give us feedback across the breadth of options.
I thought it was also important to point out that there are trade-offs and options inside areas. So, inside an area like transport, we might hear from the public that we want to pay more and do more, that we want to stick with the status quo.
[Video: video tile of Toby Shepherd in the top-left corner, Deputy Mayor, Councillor Desley Simpson in the top-right corner with Ross Tucker bottom-left and Nicola Mills bottom-right corner all with Auckland Council Long-term Plan 2024-2034 background.]
Sorry, status quo with the central proposal. Excuse me. Or to pay less and do less. So that might be within an area, but we can also think about prioritising between areas.
So, should we focus on one area at the expense of another? Should we keep them at the same level or in fact, prioritise doing more in both?
So, lots of different ways to think about it. And the team have developed a feedback form that allows you to kind of get into that detail. So again, we're really interested in your feedback and here to clarify any questions that would help you giving that feedback tonight.
Right, that brings us to the part of the evening where we will answer some questions from the audience. Just a reminder from me if you pop those questions, and I can see a few coming through now in our question and answer bit, inside the Zoom call.
If you keep them short and sharp, it does help us kind of zero-in on what the question is asking and then we can find the answer for you from the staff that we have online with us tonight.
And again, if we don't get to your question tonight and it hasn't been answered, we'll pop it up as best we can online in the next few days at akhaveyoursay.
For those of you online tonight that want to hear more detail about the future fund, make sure to join us for our second webinar like this, which is happening on Tuesday, the 12th of March, where we'll get into specifically the future fund. So we have another option there for some more detail.
Right, we'll go to our first question now and I wonder if I can ask Ross to come on screen for us, please and just talk to the financial challenges the council is facing specifically in this long-term plan.
Kia ora Ross.
[Speaking: Ross Tucker]
Kia ora, yeah so in the presentation there's a range of factors mentioned about what are driving the financial challenges and that is really the case. It's not just one thing, it's a combination of a bunch of different factors that is creating a pretty significant financial challenge for the council at the moment.
Firstly, inflation and interest is a big driver, so that's not unique to Auckland Council. All of the councils around New Zealand are facing it, households are facing it, businesses are facing it. The entire world really is facing challenges around a surge higher in inflation and interest, sort of post-Covid.
So that means the higher inflation costs means higher staff costs, higher materials costs, interest rates.
Council have a large amount of debt and so while there's a programme to hedge a large chunk of that, the size of the debt book for Auckland Council means that even the unhedged bit where we pay high interest rates on that, it adds up to a big number. So you've kind of got these kind of those pressures that everyone's facing.
You've then got... Auckland is a growing city and an increasingly diverse city. So there's a lot of challenges in this budget around how do we provide more services to more Aucklanders?
Some of that is in asset space and providing more roads and pipes etc. One of the big challenges is around the cost of public transport services, trying to provide more buses, more trains, more ferries for growing and expanding Auckland.
There's the rising cost of asset ownership as we add more assets, and as our assets deteriorate and wear out, we've got rapid increases in asset costs. And a good example of that is a City Rail Link cost, which is putting a lot of pressure onto the third year of this plan in particular, hence the eight per cent rates rise.
So once the City Rail Link project is complete, we will have, in that third year of the plan, we'll have a bunch of interest costs we have to start servicing.
We'll have a bunch of depreciation we need to cover for eventual replacement of those assets. But we also have to run more trains through the stations. We'll have to maintain clean, operate a bunch of stations and other assets. There's a whole lot of extra costs that are related to assets that have been built.
At the same time, we've got all of the storm response and recovery costs, and there's a package there with a bit of support from central government, a cost sharing agreement, but we're talking about a $2 billion package that's only part-funded by central government.
So, there is going to be significant costs to deal with these storm events. Plus, we need to think about how do we cope with any future storm events or natural disasters.
And then the other element is that we've got a limited funding model. We're very reliant on rates increases and a small number of funding levers.
We're working with central government where we can, we get transport subsidies, but all those things are kind of limited. So we've got all these extra costs and pressures, but a constrained funding system we have to work within. So it's really those kind of five things all coming together that paints a really challenging financial picture for us.
Back to you, Toby.
[Speaking: Toby Shepherd]
Thanks, Ross.
And kind of speaks to the approach of taking the central and the more and less proposal out to the public, because in order to move through those challenges, we need to make some tough choices there.
Just a next question while I have you, Ross. We're getting some questions around what council is doing to reduce its own costs. Are you able to speak to that question please?
[Speaking: Ross Tucker]
Sure. So, a number for many years, really, since amalgamation, council has always had savings targets and challenges and programmes to look at the assets we have, and are there surplus assets we don't need. So there is an ongoing programme of finding efficiency savings and selling surplus assets. So that has continued through this LTP.
There's a target in there that is $20 million in the first year, growing to $50 million per annum of operating cost savings that builds over and above all of the existing savings challenges and in addition to absorbing a bunch of inflationary pressures.
So there is a significant cost savings challenge built into this that the Auckland Council organisation and group will have to work through. And there's a number of things that play into that, some of that value for money reviews, looking at the best way to deliver services, and sourcing vs outsourcing a target approach.
There's a look at how do we take a shared services approach more across the group and share reduced costs, but achieve $50 million of savings? Some of the services we provide will need to be looked at and some hard choices made.
Toby, you mentioned this do more and do less scenario, and so there's some different savings targets under those other scenarios.
Under a pay more, get more scenario, if the community is prepared to pay high rates, well, we can do less in terms of things that are packed services, we can have lower savings targets. So, we protect services, we provide the staff and the resources to achieve the outcomes that everyone wants to achieve.
But under the pay less, get less scenario, there are more, larger and more challenging cost savings targets. And under those scenarios, we'd really be looking to stop, reduce, cancel some services.
The approach there would be looking at, well, what are the mandatory must do, the statutory minimums we must provide, and a bunch of other things would have to be prioritised and reduced. So we would primarily take a view of we're highly constrained, and under that scenario, it would be looking to reduce discretionary services and make some pretty tough, challenging calls.
[Speaking: Toby Shepherd]
Thanks, Ross.
We have another question here, and I think we'll move to Nicola to respond if we can, please. And so there's a question here about local board fairer funding. I wonder if you could provide an answer there for us.
Nicola, the question there being regarding the fairer funding proposal for local boards, essentially, will there be boards that are larger winners or larger losers? Are there big winners and big losers among the boards? How does the fairer funding proposal look at the moment?
[Speaking: Nicola Mills]
Thanks, Toby.
So maybe just to describe the proposal a little bit, because I don't think it's been touched on till now.
So the Governing Body approved in principle a new funding model for local community services back in 2021. And this new model is fairer because it distributes the available funding based on a mixture of population, deprivation and land area. And that's different to the current way that we allocate funding based on the assets in each local board area.
And so when we compare the current levels of funding to the funding based on the new models, there are some boards that are currently funded above these levels and some boards that are currently funded below these levels. So the impacts on each local board depends on the scenarios that we're proposing in the LTP.
So in the central proposal, this is a combination of shifting some funding around and adding some new funding so that the impacts on any individual local boards are not too great.
In the pay less scenario, that means that there's no new funding for local boards, it's only reallocated. So that has more of an impact on those local boards who might be funded above those equitable levels with reduced funding, and the others will get more.
And in the pay more scenario, then there's additional funding provided to all of the local boards so that no one is losing money. So it's a little bit hard to understand it all. I would also refer you to the consultation material that explains it.
Thanks, Toby.
[Speaking: Toby Shepherd]
Thanks, Nicola.
Just reading through the questions here, we have one around Tūpuna Maunga Authority. Tam, are you able to let us know where we can find more information about the Tūpuna Maunga Authority?
[Speaking: Tamsyn Matchett]
Yeah, absolutely thanks, Toby.
So, under legislation, we are required to include the Tūpuna Maunga operational plan within both our annual plans and our long-term plan as it relates to the next financial year. And so that is what is included in this long-term plan and you can find a summary of that plan on page 510 of our supporting information.
That's a very big document, but if you're interested, that is the page number there. Or you can head straight to the Tūpuna Maunga Authority's webpage for information on their draft ops plan.
[Speaking: Toby Shepherd]
Thanks, Tam.
Our next question here. Has any research been done or is any research being done around using AI, so artificial intelligence to analyse and optimise our transport networks?
We have some transport colleagues online here tonight. They may have one or two comments. I have Hamish, I think if you could come and take that question for us, please.
Thanks, Hamish.
[Video: video tile of Hamish Bunn with office background appears in the middle of Toby Shepherd and Deputy Mayor, Councillor Desley Simpson.]
[Speaking: Hamish Bunn]
Thank you, Toby.
Hopefully you can hear me. We at Auckland Transport, working with Auckland Council, New Zealand Transport Agency already have a kind of extensive suite of models that we use to forecast transport outcomes out to 30 years based on forecasting of projects and current travel behaviours.
So, we've got some strong capabilities in this area already. We are always looking for opportunities to improve our performance. We have looked at the possibility of using AI, but at the moment, so far there's nothing that we've seen that can kind of improve on those capabilities that we already have.
So, the short answer is not at this point, but we're keeping an eye on how things progress, thank you.
[Video: Hamish Bunn's video tile disappears leaving the video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills.]
[Speaking: Toby Shepherd]
Thanks so much, Hamish.
Yeah interesting evolving space, that one.
Our next question. Tam, in your presentation you talked about a change of ownership with regards to the airport shares and that was in relation to the Auckland Future Fund. Are you able to talk to that change of ownership of airport shares? The question is specifically asking us, does this mean we will sell those shares? So if you could just talk us through that, please. Thank you.
[Video: video tile of Tamsyn Matchett rejoins the team in the top-right of the screen.]
[Speaking: Tamsyn Matchett]
Thanks, Toby I think I might hand this one to Ross there, who I'm sure will be far more eloquent than I will be on that particular.
Thanks, Ross.
[Video: video tile mage of Tamsyn Matchett disappears, leaving video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills.]
[Speaking: Ross Tucker]
Thanks for the question.
So, the proposal is to establish an Auckland Future Fund that will improve the council's long-term position and in terms of its ability to be able to respond to future disaster or natural events. The proposal is to fund that by issuing a long-term lease for the Port of Auckland and to transfer the Auckland airport shares into that fund.
So, what that means is that we would transfer the ownership of those shares from Auckland Council into a fund. The fund would be run by some external fund managers. The Auckland Council would set the investment priorities, investment policies and objectives for that fund and then the fund manager would have to operate that in a way that's consistent with what Auckland Council has set.
The way that the fund is envisaged working is it would hold a diversified portfolio of investments. One of the key objectives would be diversify the risk so you don't have all of the eggs in one basket or two baskets.
If you think about the port and Auckland Airport and if you think about a major natural disaster event hitting Auckland, it's likely Auckland Airport and Port of Auckland will be affected at the same time as when the council wants to draw on those funds.
So, part of the objectives for a fund manager would be to spread the risk. So that means it's highly likely. It's almost certain, really, that a fund manager with those instructions would go away and sell down that remaining set of Auckland Airport shares.
They might choose to hold some of it as part of the portfolio. They might choose to hold none of it. They might choose to sell immediately or sell down over time. So those would be their kind of calls on how they manage that within the objectives and policies set by Auckland Council.
But we do want to be quite upfront while Auckland Council won't be the ones out there selling it, it is highly likely that most of all the shares would be sold under this proposal.
[Speaking: Toby Shepherd]
Thanks so much, Ross.
Our next question here. Hey, Michelle, I wonder whether I can bring you back on from transport.
So there's a question here around providing more information. Will we be providing more information in detail on the transport proposals this evening? So please join us, Hamish, and give us a bit of an overview about that transport proposal.
But I would just encourage the audience to jump online and go to akhaveyoursay.nz/ourplan, the address is on the screen here in all of our backgrounds to find out the in-detail information. But I think it could be helpful for you to provide a little overview for us, if you can, please Hamish, thank you.
[Video: video tile of Hamish Bunn with office background returns in the top-middle of the screen between Toby Shepherd and Deputy Mayor, Councillor Desley Simpson.]
[Speaking: Hamish Bunn]
Thank you, Toby.
Ok, so in terms of an overview, well, speaking to the capital expenditure, and then hopefully I can ask my colleague David to perhaps speak to the operating expenditure.
But in terms of capital, what we're investing in concrete infrastructure. So a key aspect of this long-term plan proposal is to increase our investment in renewals of the road network and the public transport network.
One of the things that we've had, a clear piece of feedback that we've had, is we've done work ahead of this long-term plan, is that we've been falling behind in our renewal of road surfaces. So you're ending up with potholes, and that's going to cost us more over the long run if we don't address it.
So that reflects a strong priority from the council to ensure that we're maintaining our existing assets properly. So one of the things we'll see in this long-term plan, increase in renewals investment, also a strong emphasis on delivering smaller projects faster, so the likes of network optimisation technology, dynamic bus lanes, those kinds of smaller projects that we can deliver quickly to get results on the ground.
And of course, also we've had emphasis from council as well on making sure that we continue to support the kind of investment that we've already made in City Rail Link and Eastern Busway.
So, the proposal here for the $13.4 billion investment in capital side will include everything that's needed to make sure that City Rail Link can work on day one to deliver its operating and then completion of stage three of the Eastern Busway project as well, so there's a significant investment there.
We're continuing in safety investment, cycling, other active modes and walking, continued investment in some of the key corridors that we talked about, such as Glenvar and Lake Road.
So there's a whole spread of things sort of too numerous to list, but the proposals are set out there in the documentation.
As Toby has said, if there is additional funding, then we can do more in terms of supporting more accelerated investment in rail, for example, over time, or ferries and other areas. But take a look at the consultation document and that should give you a good sense of what's in the capital programme. David, do you want to speak to operations quickly?
[Video: video tile of David Bardsley with the Auckland Council Long-term Plan 2024-2034 background appears on the top-left of the screen as Hamish Bunn tile disappears.]
[Speaking: David Bardlesy]
Yeah, thanks Hamish.
Look, in terms of the operational space, we all know that we've had some challenges over the past couple of years, especially post COVID, and some of our public transport services weren't operating as we wanted them to.
So what we are doing is prioritising those public transport services to increase decarbonisation and also spending the money on the maintenance of our assets that we've got.
At the same time, we know that there are a lot of challenges in terms of funding and so we're looking for efficiencies in the business on an ongoing basis and to make sure that we get the value from our assets and charge people for the use of the network as they're using it, including developers etc. as well.
So, we're trying to make sure that we get the mix right to provide the right services to Aucklanders and maintain the assets that we've actually got out there. And that's probably the best way to explain the proposal in the long-term plan.
Thank you. Back to you, Toby.
[Video: video tile of David Bardsley disappears, leaving video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills on the screen.]
[Speaking: Toby Shepherd]
Thanks, David.
So, there's a few questions coming through in the transport space. One is the GPS. So for those who don't live in a world of acronyms, it's the Government Policy Statement on Land Transport.
The government issues a statement like that in order to direct how it will allocate funds into the regional land transport plans, which is a process that Auckland Council and Auckland Transport are undertaking right now.
So the question is that the GPS, the Government Policy Statement has just been released, I believe, today or very recently. David and Hamish may therefore not be in a position to comment on it. What I'll do is I'll just check and see whether there is any comment to be made.
There's a specific question about AT including footpaths and pedestrian infrastructure and its major projects, even though the GPS has less of a focus on it.
David, Hamish, this is kind of hot off the press. Are you in a position to be able to comment? And I think it might be very reasonable that you are not. So I just want to ask you both if you have anything to add to that question at this time.
[Video: video tile of Hamish Bunn with office background returns in the top-middle of the screen between Toby Shepherd and Deputy Mayor, Councillor Desley Simpson.]
[Speaking: Hamish Bunn]
I'll start. And unfortunately, it's a little bit of a no comment in that we haven't had a chance to absorb what the GPS is specifically. I mean, if it's a question about will we want to be including: safety infrastructure, walking infrastructure as part of our general projects.
I think that will certainly be our intention, because we've got clear direction from council that we want to achieve the kind of mode shift and shift to active mode.
So, we'll be working to do that whenever we can. But I do need to caveat it with understanding what that's going to mean for funding rules and various other things as well. So, there's a lot there that we need to absorb.
Thanks, Toby.
[Speaking: Toby Shepherd]
Yeah, I think that our audience will appreciate that we're dealing with that in a sort of a live environment.
Hamish, I wonder, just before we do move on, there is just another. Sorry, just to bring you back, there is another question here which you may or may not be able to speak to. So it's a bit of a comment, agree, around the sort of lack of maintenance around roading services.
So just a comment that you made there about asset quality in the transport network and a question about plans to continue raised pedestrian crossings and whether there was another use for that spending, whether or not that cost could be put to on roading, as the example given.
Now, I know you just mentioned there that there would still be a focus on safety in the network, but whether you had anything else to add.
[Speaking: Hamish Bunn]
Thank you.
So, yes, we're hearing the feedback on raised safety tables. I think that's a key piece of feedback that the organisation will take into account.
So we'll be looking to see what can we do to support safety outcomes. Make sure that we reduce the number of deaths and serious injuries on the network, but we'll be trying to do it without resorting to raised crossings where that's appropriate.
And then we'll be looking to reallocate the funds to other safety outcomes or other types of projects. But, of course, this depends on the sort of feedback that we receive as to how people see the priority of safety relative to other things, such as investing in public transport going forward. So we're keen to hear feedback on this aspect.
[Speaking: Toby Shepherd]
Thanks, Hamish. We have one other transport question, but I think we might go to Nicola Mills, please, for this.
So, it goes to a comment David made, one of our colleagues from AT around the funding environment for transport and how changeable that has been of late.
So, there is a question in the chat here about council's ability to deal with the revenue shortfall from the removal of the regional fuel tax. So recently the government made the decision to remove that, and that is a revenue source for council.
So, there's kind of two questions, I think, in here, Nicola, if you can speak to them.
The first is what are we doing about that shortfall as a result of that decision?
And then there's a secondary sort of question here and whether you're able to comment if the government is going to provide any funding to council to sort of bridge that gap.
Are you able to speak to the regional fuel tax for us, please?
[Video: video tile of Hamish Bunn disappears, leaving video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills on the screen.]
[Speaking: Nicola Mills]
Thanks, Toby.
Yeah, and upfront in the mayor's video, he mentioned that the regional fuel tax being repealed means that we lose $1.2 billion. So that's quite significant.
So, that was announced just a couple of weeks ago that the fuel tax, Auckland's regional fuel tax, would end on the 30th June this year, and that's four years earlier than it was supposed to end.
So, we collect about $150 million a year in the fuel tax. So over four years, that's about $600 million. And because we receive matched funding from Waka Kotahi, that is where we get the $1.2 billion hit to the revenue that the mayor was mentioning in his video because of how recently we received the news.
At the moment, what we have done is reduce the capital programme, the transport capital programme that's set out in the consultation document by that amount and we'll have more time to consider the details of the impact as we work through consultation and do other transport planning prior to decision making in May.
So, I hope that answers the question, Toby.
[Video: video tileof Tamysn Matchett joins the team alongside tile of Deputy Mayor, Councillor Desley Simpson.]
[Speaking: Toby Shepherd]
Thanks, Nicola.
So, a few more questions in the chat around the airport, so I might ask Ross to pop on and take a question there, please.
So, this question is around the dividend that we currently receive from owning the airport shares. And I suppose the questioner is asking, has that been considered in how we think about whether we sold those and the treatment of that in the Auckland Future fund?
So, Ross, do the shares that we own in the airport bring in dividends right now? And have we thought about what we lose, essentially, if we sell those shares?
[Speaking: Ross Tucker]
Yes, the airport shares do bring in a dividend at the moment. If we were to retain the shares based off current projections, in the next few years, it's around 30 million per annum, dividend growing to about $40 million by the end of the 10 year plan.
So, we also get profits and dividends from the Port of Auckland at the moment as well. So, what we've looked at is, well, if we were to go with a proposal of leasing the port operations and transferring the shares, we would lose those revenue streams, but what we gain is a return from the fund. So, we'd get investment income from the fund.
There's an assumption there that we would, after an allowance for transaction costs and fees, get about seven and a half per cent return from that income.
Five and a half percent of that would be made available for council to take the place of those lost dividends and profits from port, and then the two percent would be reinvested to maintain the value of the fund over time in the face of inflation.
So basically, we lose one stream of profits and dividends, but we gain some of the distributions, the returns we earn on that investment portfolio.
And so we've done the maths, and that's all set out in the documents. If you're interested, you can go and see the tables in there and compare it, and there's a range of different options. What if we just did the port? What if we just had the airport shares? What if you put the port in the airport shares? All those kind of things and various combinations.
So when we've looked through it, the benefit that we get is more than what we gain from the future funds in terms of the returns there, more than offsets what we'd lose from what we give up.
So all of that depends on assumptions, and there are nothing is certain. There's always a risk around any of those things, and there's risk around the status quo. Those dividends aren't guaranteed. And as we saw through the COVID periods, those dividends and profits evaporated when the world changed. So there's always risk in these things.
We've done our best modelling, and that's all set out in the material.
[Speaking: Toby Shepherd]
Thanks, Ross.
There's a question here, Justine. I wonder if we could move into the community space.
So we've just got a question here about, I believe the person asking the question heard about a proposal to increase the charges at council-owned buildings for community groups that might be using them. The question here is, has that made it into the LTP? Are you able to speak to that proposal, please?
I'm also seeing, sorry everybody. I'm seeing online from Justine, she is having trouble with her connection I might ask Andrew Duncan if he can join us online, please. And whether he's able to speak to that question about community groups using council-owned buildings and whether their charges are changing inside the long-term plan please.
[Video: video tile of Andrew Duncan with a blurred background joins at the top-left of the screen alongside Toby Shepherd.]
[Speaking: Andrew Duncan]
Good evening.
Yes, the council is proposing to standardise the charges for booking spaces at council facilities and venues.
They're quite different in many parts of the city at the moment, and the proposal is that we would look to standardise those reflecting where we're providing a similar level of amenity and service and similar amounts of staffing across those facilities so that people are paying a similar amount in similar areas this year.
[Video: video tile of Andrew Duncan disappears, leaving video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills on the screen.]
[Speaking: Toby Shepherd]
Thanks Andrew, short and sweet.
So, there are a couple of quite specific questions regarding very specific sort of locations. So what I'll do is I might move to the more regional.
Here we are. Hamish, I wonder whether you could join us from AT and give us a perspective on congestion charging or as it's often been referred to of late, as 'time-of-use' charging as well.
The person asking this question is saying, seems like a really good idea, but likely to be unpopular. Can you speak to AT's consideration of congestion charging and any work that's underway or what you're able to tell us there?
Thanks, Amy.
[Video: video tile of Hamish Bunn with office background returns to the top-middle of the screen between Toby Shepherd and Deputy Mayor, Councillor Desley Simpson.]
[Speaking: Hamish Bunn]
Thank you. Yeah, I think there's been a long history of looking at congestion charging in Auckland and it's definitely got some pluses in terms of its popularity.
My recollection is that some of the more recent surveys are seeing people are coming around to it, but it kind of depends on the nature of the scheme.
Anyway, in terms of the question about whether we're considering it, we certainly are. That's something that the council and I believe the mayor has emphasised in terms of time of use charging.
And at the moment, as part of the capital costs proposed for this long-term plan, there's an allocation of funding in there to build a congestion charging system, but that's dependent on government supporting the legislation that would need to implement a congestion charging scheme.
So, we're certainly keen for government to make those changes and we do support congestion charging as part of the suite of changes for Auckland supported by public transport.
Thank you.
[Speaking: Toby Shepherd]
Thanks, Hamish.
I suppose the additional piece of context there on congestion charging, time-of-use charging is it's a tool that will manage the transport network.
It's also something that we need to consider in our long-term planning, but it's not part of the long-term plan as it's currently proposed and we're not seeking direct feedback on that in our feedback sheet.
But of course, whenever you engage with council and provide feedback, we're really interested in hearing perspectives on all issues and can take that through to the proper place, but just a reminder that that's not sitting inside the feedback sheet at the moment.
[Video: video tile of Hamish Bunn disappears, leaving vide tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills on the screen.]
Ross, I have a question here about how the long-term plan connects in with other plans and investment frameworks in Auckland.
So we've talked about a couple tonight and we've had Hamish and David from AT mention the Regional Land Transport Plan.
This person asking the question is also aware of other plans. For instance, the City Centre Master Plan I think they're referring to here.
So there are other frameworks and plans and ways that the council thinks about investment. How does the long-term plan, can you give us a sense of how it kind of meshes with those other frameworks, please?
[Speaking: Ross Tucker]
Okay, thanks for the question. I'll try my best.
There's a lot of plans, often councils, that are complex based, there's lots of different things, and I really appreciate that can be quite confusing for people out there. It could be confusing for people in here as well.
I guess the way I think about it, quite simply is we've got some really big strategic plans, like we have the Auckland Plan, which kind of says, well, what does Auckland as a city in a region need over the next 30 years? And we've got things that go alongside that, a Future Development Strategy, which is where does housing and other development occur?
So, it's kind of like really big, broad strategic plans. Then you've kind of got really specific plans, like a place-based thing such as the City Centre Plan and Waterfront Plan and other local area plans that are very much on a particular area they're at the detail.
I guess in a sense, the long-term plan sits somewhere in the middle of those things. It builds up from some of those more specific, localised things, but it also kind of takes direction from those big strategic plans as well, such as the Auckland Plan.
So, what it really does is it kind of looks at, well, what are all those things we're trying to achieve for the city? And it's something we do once every three years. We look across the next 10 years, look at all of the big plans, things that we're trying to achieve for the city. And because of this is in essence a budget, it's other things beyond that as well. But it does have a budget element to it and the numbers have to add up.
So, this is kind of really where the rubber hits the road, where those big strategic plans meet. Sort of the financial reality crashes into those five financial challenges I talked about earlier.
And so it's a key place where we kind of think about how do we prioritise all those different plans, how do we make sure it fits, how do we figure out and talk to the community around how much rates they're prepared to pay?
We figure out what we can afford. So it's kind of where those big strategic plans and the detail that comes up from the more specific ones, it's where they meet the funding requirements, where we kind of put plans to the rate plan go.
Okay, we've heard all the different feedback from all these different planning consultations and ideas, but we've actually got to make some hard trade-off decisions, and these things need to become financial reality.
The RLTP, the Regional Land Transport Plan, is another tricky one. That is, I guess, to my mind, in a simple way, that's kind of the detail that sits behind LTP.
The long-term plan is how much money do we want to take off ratepayers and other sources? How much money do we get from government? And what is the broad size and the outcomes we're trying to achieve in the transit?
So, is it a $14 billion package or 16 or 24 or whatever it is? And then fuel tax means it's a little bit less than that. But then the detail of which projects. How do we prioritise line by line, that more granular project level stuff is the subject of the RLTP? And so that will come out, and that will follow a little bit later.
It'll be informed by the GPS that's come out today. So, for the long-term plan, we're looking at that high-level direction. What are the broad priorities?
How much money goes in? And then the transport detail will come through later and there'll be lots of opportunity for the public to feed back into the RLTP at specific transport project levels.
Thank you.
[Speaking: Toby Shepherd]
Thanks, Ross.
Yeah, it's a really big question. Right. And Ross is one of the people charged with navigating that so thank you, Ross.
Our next question here goes to what has become known as the Making Space for Water programme.
I wonder if we could get Nick online, if you can pop your screen on, please, and take this question, Nick.
So, this is around what council is doing to respond to the flooding events of early last year, we just recently had the anniversaries. And what's in the long-term plan specifically to respond to those flooding events?
Are you able to speak to that, Nick? And perhaps able to speak to the central proposal and then the kind of paying less and getting less and paying more and getting more kind of components of the Making Space for Water programme.
Thanks, Nick.
[Video: video tile of Nick Vigar with a blurred background joins at the top-left of the screen alongside Toby Shepherd.]
[Speaking: Nick Vigar]
Kia ora Toby.
I think the key thing is to see that there's two parts to Making Space for Water. Part of that is a co-funded part with government, and that has its own. That's obviously our blue-green networks and a whole lot of capital works beyond that, sitting within the LTP proper, there's a whole lot of extra operational expenditure.
And so, I think the key thing there is that the government proposal is an all or nothing, it's a take it or leave it.
But we have various responses we can have from an operational perspective as council, and I think those are the kind of key questions we need to address. And so obviously we're interested to hear everyone's response.
We feel the response of making Space for Water is a response to that 'risk to life' around the region. It's a one-off opportunity and a one-off opportunity from a funding perspective as well, I'd suggest, obviously, there's a lot of, beyond Making Space for Water, there's a lot within the wider council family that are much part of the wider response.
But I think, you know, this is the first iteration in how we start to address some of our climate issues, one of our much bigger issues.
Kia ora.
[Video: video tile of Nick Vigar disappears, leaving the video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills on the screen.]
[Speaking: Toby Shepherd]
Thanks, Nick. And of course, the council undertook some consultation on Making Space for Water specifically. And then it's my understanding that the central proposal reflects a lot of that feedback within that consultation.
Would that be right?
[Speaking: Nick Vigar]
Toby, we try to listen to what people are telling us, so we've tried not to leave this all to the last minute in terms of now in the LTP, and we've tried to spread this out so that people have an opportunity to digest it and to understand it.
So, we've tried to listen to that feedback and I think that central proposal kind of really responds to that.
[Speaking: Toby Shepherd]
Yeah. Kia ora, thank you Nick.
Great question there about flooding response.
Just to keep in the water theme, we have a question about how Watercare is treated in the long-term plan.
This might be one for Ross and he'll let me know otherwise.
The question here, Ross, is around funding to Watercare in the LTP and whether any funding that council provides to Watercare will have an impact on the proposed increases to water rates in Auckland.
I wonder, Ross, do you want to give us just a piece of context there and I can start us off Watercare, setting those water rates and why they've chosen the level that they have and what that means for the LTP.
Thanks, Ross.
[Speaking: Ross Tucker]
Yep, sure.
So, Watercare is an interesting beast in terms of how it fits in with the rest of the long-term plan. It is a little bit separate.
So, up until a few weeks ago, it was by law, it was completely separate, and water was going to be outside this long-term plan, and it was all going to change as part of the previous government's Three Waters reform.
That's all now been repealed, and so suddenly water is back in. So, we're kind of under the status quo arrangement.
So, the way that works for Auckland Council is that the rates that we pay generate targeted rates that are charged to ratepayers - they don't pay for water supply and wastewater services.
What way those are paid for instead is Watercare charges people, through their water bill, there are user charges for water. So, it's all completely separate.
So, there's a complete separation between water charges and general rates. So, in terms of the trade-offs that we're talking about, when we talk about rates increases and the get more, pay more or get less, pay less water is kind of the water charges and Watercare is a bit separate to that.
But there is one point of connection, which is in terms of balance sheet and debt, the use of debt.
So under the current status quo, Watercare is part, 100 per cent owned by Auckland Council. It's all part of the council from a debt perspective. So what that means is that the amount of money that Watercare can borrow to invest in water infrastructure and to help provide those services is all sort of tied up with the council's balance sheet.
And because the council has been busy investing and there's a long history and a large investment in assets, the council is kind of up and against its prudent level. So it can't really borrow that much more.
Watercare has a large investment programme in front of it. There's a lot of preferred investment, growing city, lots of work that needs to be done and some of it quite urgently.
You've kind of seen around the rest of the country what happens if there isn't adequate investment. So because you've got this large investment need and Auckland Council is at its debt ceiling, Auckland Council can't just let Watercare borrow whatever it wants to fund its need.
The key thing we have to manage is what we call the group's debt-to-revenue ratio.
So, it's how much revenue we get compared to the debt that that revenue can service.
So, the council has managed that debt impact by setting a debt ceiling for Watercare of 340 per cent. That means that the board of Watercare has had to make some difficult choices - carefully consider what's the right level of investment in Auckland's water infrastructure and what are the prices, the water bills that are used to service that debt.
The view of the Watercare board is that there's a lot of investment. It's really critical that we proceed with and just deferring large chunks of it or significant reductions are not the right way to go.
So, that only leaves them with one option, really, which is the price.
So, they're proposing a 25.8 per cent increase in price from 1 July this year and that is because of these kind of debt constraints.
So what you've got now is the new government's come out with a policy of Local Water Done Well? It's looking at new models around how might debt work, how might balance sheet funding work for different councils, and there might be different solutions in different parts of the country.
So, all that is kind of being worked through now. Lots of discussions going on, but no certainty or clarity about what that might mean for Auckland at this point.
So, if nothing else changes, if there are new models, new laws changing, then the current plans are for that water price charge to go ahead, to enable water care, to go ahead and build the investment that the city needs while staying within those necessary debt parameters.
Thank you.
[Speaking: Toby Shepherd]
Thanks, Ross. A really important answer. Thank you.
We have a question here about the port leasing arrangement and Ross, I'm wondering whether. Please defer me to one of our colleagues if I have this wrong.
The question is about the proposed options to lease the port land. The question is what difference would there be in terms of level of service with council ownership and the kind of private ownership or a lease arrangement?
Are you able to talk to how council might approach a question like that when it comes to levels of service inside the leasing arrangement? Is that one for you, Ross?
[Speaking: Ross Tucker]
Yep. I'll do my best.
So, yes, the proposal is not to sell or privatise the port. The proposal is council to retain the underlying ownership of the land and then enter into a lease where someone runs the port operations on that land for around 35 years.
They would make an upfront payment to the council for the rights to do that, and then they would make investments and then earn profits off that running of the port.
A key mechanism within that is the lease arrangement itself, so it has a bunch of terms and conditions that would be negotiated.
So, under the status quo, Auckland Council owns 100 per cent of the port, but it can't dictate the day-to-day operations. Those are decisions are made by the Port of Auckland Board of Directors and that occurs under the Port Companies Act. So that act basically requires the port to be run as a successful commercial business, basically operated like a private sector, profit-making enterprise would operate.
So, there's already sort of an arm's length operation.
What this proposal would see would be a new operator come in. They would run the port as they see fit, in a commercial sense, to achieve the outcomes, to get a return on their investment.
But it would have to be within the parameters set out in the lease so the council could make sure that there are enough controls and safeguards around how the port operates, that the customer is treated fairly, that access to the port is there.
In a sense, you should see similar services provided to importers and exporters, the users of the port. Ideally, you would see better, expanded, more efficient services as a private operator tries to make things work better. This model of port leasing has been used in Australia for many years.
There's a range of different examples and people have had a look at those things and there's lots of examples there of how things have been run successfully under exactly this kind of arrangement, thank you.
[Speaking: Toby Shepherd]
Thanks, Ross.
I suppose a key take away there is the arrangement is to be developed and the council can set the terms of that arrangement as it enters into the negotiation. So it's a really good thing to keep in mind there.
We are coming to the end of the questions that I have coming through here. I've got one or two more, if we can just address.
We've got a question here about climate action in the long-term plan. I can see we're just deciding who amongst us from the staff will take this question, but the person asking the question is referring to the 2021 Long-term Plan.
So, our last long-term plan, inside that long-term plan, we had a package for climate action of $152 million at the time. And the question is whether or not that package is retained inside the central proposal for the long-term plan.
Pramod, am I right to ask you to pop your camera on and just speak to that question, please?
[Video: video tile of Pramod Nair with a blurred background joins at the bottom left of the screen alongside Nicola Mills.]
[Speaking: Pramod Nair]
Hi Toby, kia ora everyone. Yes, I can answer that question.
So, as Toby mentioned, the Climate Change Action Fund was approved in the last long-term plan as part of the council's commitment to reducing emissions and addressing as much as we can the impacts of climate change.
So that package is retained in this central scenario and the funding is extended throughout the 10-year period of this long-term plan that we are consulting on.
So the funding was put towards things like speeding up the electrification of the bus fleet, planting more trees and increasing our zero-waste resource recovery network.
So those key actions from that funding will continue under the central proposal.
[Video: video tile of Pramod Nair disappears, leaving the video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills on the screen.]
[Speaking: Toby Shepherd]
Thanks so much, Pramod. Good to get a bit of clarity on that one.
We've just had a question in here responding to something that I think you talked about, Ross, although Nick may be the person to take this question.
So, just a comment that was made around investing and debt servicing and what might happen around upgrading and maintaining current infrastructure to ensure that our systems can kind of handle the flooding in the future. I think it's a reference to your answer around the financial challenges that council is facing, and that that's one of the pressures that we're responding to.
The person asking the question has a property that was yellow-stickered. I'm sorry to hear that, due to the stormwater inundation and contamination with sewage.
So I think it's a question here around will that maintenance continue?
Are we able to provide any more detail there around ongoing maintenance?
I know, Ross, I think the comment that you're making there is that the costs of that maintenance are increasing and that's a financial pressure for us.
Anything to add there in response to that question?
[Speaking: Ross Tucker]
Yes, I think I was just acknowledging that these things are serious issues and really important. And this all adds to the funding challenge. In terms of the flood impacts, there is some emergence, there's the initial response of fixing what's broken and a lot of that has occurred and those financial impacts are immediate ones.
But then long term, it's how do we find long-term solutions to build more resilient infrastructure? And that is kind of playing out across a number of infrastructure portfolios in different ways. People are working through that. We've got the future funds to increase our financial resilience so we can respond to these things.
And then very specifically in the Making Space for Water programme, there are specific measures that are looking at how do we resolve some of these funding issues, and Nick is best place to that. It's a complex space.
There's a lot of good work that's been done and more work and design investigation to go through. So if Nick is on the call, can answer and talk to that. I can't really go into detail in that area.
[Speaking: Toby Shepherd]
Yeah, thanks Ross.
[Speaking: Andrew Duncan]
Toby, would you like me to comment on that?
[Speaking: Toby Shepherd]
Yeah, anything to add there, Nick? Thank you.
[Video: video tile of Nick Vigar with a blurred background joins the team at the top left of the screen, alongside Toby Shepherd.]
[Speaking: Nick Vigar]
Look, I think Ross is dead right. It is a complex space at the moment. It's a space that actually under Three Waters was set for a lot of change. And so it's a space that's still in a lot of flux, I think, under the current situation.
In particular, I think one of the things we're seeing is in terms of managing effects, we as council are having to get in and manage private streams, which is not something that we've historically done and is not something that we sort of potentially technically have to do from a strict legal perspective.
But in this instance, we're talking about people's properties and flooding and that sort of thing. So we trying to take a wider view on that. And so there's sort of a capital component to what we're talking about.
But I think, as I indicated before, there's also an operational component. And I think we're just trying to gauge as council how we step into that space in a reasonable manner.
Clearly in terms of what's come out of these events is clearly more maintenance within water courses is something that communities have been asking for and we've been out there listening and trying to provide that, but it comes with a sort of funding impact.
So, at the moment we're really trying to sort of find that line of what's reasonable in terms of private property owner and council and provide something which provides good service but also provides good value to Auckland Council and to ratepayers.
[Video: video tile of Nick Vigar disappears, leaving the video tiles of Toby Shepherd, Deputy Mayor, Councillor Desley Simpson, Ross Tucker and Nicola Mills on the screen.]
[Speaking: Toby Shepherd]
Yeah, thanks, Nick. That does bring us to the end of the questions that I'm seeing coming through here and in good time.
The last thing for us to do is just to turn to Deputy Mayor Desley Simpson who might have any reflections on the discussion this evening and maybe a comment or two about the feedback process and how we'll use that feedback.
Desley, was there anything that you wanted to add before we close out?
[Speaking: Desley Simpson]
Look, I just want to say thank you to those people who've been part of this webinar, both Aucklanders who've asked the questions and staff. I just want to give Aucklanders reassurance that their comments, when they do feedback, and I urge everyone to do that, is that they will be listened to.
And I think it's been pretty obvious in the first budget the mayor put out, it started in a very different place to where it ended up and that was a direct result of the feedback from Aucklanders. So if there's something that you like, please tell us. And if there's something that you don't, please tell us as well.
It's really important we do listen. And as I said, it is pretty obvious that Auckland's feedback is listened to and can be reflected in the way the budget actually ends up. So I encourage all Aucklanders to have their say and this is a learning tool and just a reminder that there's another one next week.
Toby, I think if you could just reinforce the details around that, which will concentrate on one of the big issues for this particular budget, which is the Future Fund.
It's a big part of this budget. It's a new concept and for Aucklanders to learn more about that, I encourage them to be part of the next webinar. Thank you.
[Speaking: Toby Shepherd]
Thanks so much, Deputy Mayor Simpson. So that session that you're talking about there is the Auckland Future Fund and you're right to plug it. It's next week on Tuesday, the 12th so we'd love to see you there for a more detailed discussion. Now just
6:00 p.m. that one, not 5:30 too.
6:00 p.m. Thank you very much. Desley yeah, 6:00 p.m. Tuesday the 12th. I've just been reminded that our Zoom call just ends abruptly. Bang on the dot. 7:00 p.m.
So I will just thank all of my colleagues who've taken time out of their evening to be available to provide answers to your questions as best we're able in a setting like this, and that the recording of tonight's session will be available online at akhaveyoursay.nz/ourplan.
So please go there for all the documentation and then if you wanted to revisit tonight or indeed see the recording of next week, that'll be available shortly after as well. Any questions that we've answered here tonight and any more that we're able to, we'll pop that up as well. So it's all available online.
And just a reminder to have your say, get that feedback in early and often.
The period for feedback is open until the 28th of March. So with that, pō mārie, have a lovely evening and thank you for joining us this evening. Go well.
[Video ends]
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