Time for local board cost cuts
Auckland Mayor Wayne Brown says it is now the turn of local boards to join council-wide cost-cutting in the face of its near $300 million budget hole.
A day after proposing selling the council’s stake in Auckland Airport — which he said could raise almost $2 billion — Brown has asked all elected members, including local boards, to do their part in trying to plug the forecast $295m budget shortfall.
Brown’s 2023/24 budget proposal is seeking record savings of $130m across Auckland Council and councilcontrolled organisations (CCOs).
That includes Auckland Transport, Ta¯taki Auckland Unlimited and Eke Panuku Development Auckland.
Brown confirmed yesterday he will ask local boards to find 5 per cent in cost savings from their total annual funding of $298m when the 2023/24 budget proposal is put to the governing body next week.
“Things are tough for everyone right now,” he said.
“When the fiscal burden of the next financial year is behind us, I will be recommending that more funding and more decisions be controlled by local boards.”
Brown said he will be asking local boards to work collectively to decide how best to achieve these savings.
That could be via a combination of reduced spending on locally driven initiatives (LDIs) and assetbased spending, postponed spending on assets and administrative efficiencies. Brown emphasised his commitment to real decisions being made by council committees and the local boards closest to the communities that are affected by them.
In a statement, he said “ideally” he would like local boards, via a longterm plan, to be given clear budgets for their communities, have the sole power to decide how to spend it, and have the sole political and legal accountability over funds and decisions.
Brown said selling Auckland Council’s Auckland Airport shares could reduce debt servicing to ratepayers by at least $88m annually.
He added the sale of the council’s take in the airport — which is its largest financial holding — could cut next year’s rates rise by nearly a third.
Based on Thursday’s closing price, Auckland Council’s 18 per cent stake is valued at $2.166b. The sale of the minority shareholding is part of Brown’s 2023/24 budget proposal.
“Next year, Auckland ratepayers are set to fork out $88m in debt servicing costs to maintain a noncontrolling shareholding. With interest rates rising, the cost of debt servicing could soon reach $100m a year for ratepayers,” Brown said.
“Over the last three years, ratepayers have paid $240m in debt servicing costs to hold a bunch of shares that haven’t paid a cent in dividends. The cost of holding these shares exceeds any return, and forecasts suggest this situation will not be reversed . . . in the foreseeable future. If the airport needs additional capital for new projects, Auckland ratepayers could be asked to stump up extra cash or see our ownership stake fall even lower.”