Auckland Council stands to lose $500m in the next financial year

Author
Newstalk ZB / NZ Herald,
Publish Date
Fri, 22 May 2020, 6:23PM
Auckland Mayor Phil Goff. Photo / Herald
Auckland Mayor Phil Goff. Photo / Herald

Auckland Council stands to lose $500m in the next financial year

Author
Newstalk ZB / NZ Herald,
Publish Date
Fri, 22 May 2020, 6:23PM

Auckland Council has put together a $65 million hardship package for people struggling to pay rates as a result of the Covid-19 pandemic, says Mayor Phil Goff.

It is also looking at reducing some services temporarily and selling or leasing more non-core assets.

Goff has firmed up a Herald report this week that council stands to lose $500m in the next financial year, saying the council expects to have $550m less cash and it is conducting a review of jobs with redundancies likely.

He has released more details today about which areas of council operations are reeling from the impacts of Covid-19 - including Auckland Zoo, which has already seen lost revenue of $1.1m and expects another $5m over the next year.

The loss of conventions and concerts will cost another $14.2m and revenue from community facilities like swimming pools, leisure centres and holiday parks will be down $30m. Reduced parking fees and fines will be down $40m.

This week, Fletcher Challenge predicted residential building consents will shrink by about 30 per cent over the next year and the council is factoring in $50m in lost revenue from consenting and licence work.

The council is also predicting dividends from Ports of Auckland and Auckland Airport will be down $60m each, or $120m.

The figures come from a confidential budget meeting yesterday and ahead of public consultation on an emergency budget where Aucklanders will be given a choice of a 3.5 per cent or 2.5 per cent rates rise. Public consultation starts on May 29.

In a statement to the NZX today, the council said budget cuts could see some service levels reduced temporarily and a proposed increase in the target for the sale or lease of non-core assets. No details were given.

"The severity, duration and longer-term implications of the disruption remain highly uncertain and therefore the financial implications for council are also highly uncertain," said the statement, saying the council was in a strong financial position going into Covid-19.

Goff said rates make up about 40 per cent of the council's income, saying its other sources of income like recreation facilities, transport, concerts and dividends, have dried up over the past three months.

He said revenue from rates could also fall next year, because the council is proposing to allow people in hardship as a result of the pandemic to postpone or defer rates payments.

"That's the right thing to do, but it means council may suffer a shortfall of around $65 million worth of rates income in the time that it would normally be available to support the funding of services and facilities like libraries, leisure centres and parks.

"All of this adds up to a huge challenge for Auckland. As a city and a council, we will have to make difficult decisions to reduce costs while ensuring we can continue to deliver key services and invest in critical infrastructure the city needs and which boosts jobs and economic recovery. We also need to target assistance to those in the most hardship because of Covid-19 by deferring rates," said Goff.

Goff said the council was looking at ways to save money and reduce expenditure.

"We've asked staff to take voluntary pay cuts, and we're conducting a review that will result in fewer jobs in our organisation in the coming months."