In the immortal words of Calvin from Calvin and Hobbes, a good compromise leaves everybody mad.
That’s been true for the cash-strapped Auckland Council, with all 20 councillors and Mayor Wayne Brown having to put together another tough-to-swallow budget that leaves some bemoaning potential service cuts and asset sales and others upset over projected rates increases.
The majority of the councillors voted on Tuesday to send a version of the long-term budget out for public consultation, although it appeared nobody was completely happy with where it ended up.
Brown pointed to the difficult financial straits he inherited upon election 18 months ago, followed by increasing inflation, natural disasters and infrastructure failures.
“Just look what happened here in Auckland in the last 13 months,” he said. “Did anyone imagine the floods, the cyclone, the major sewer collapses all happening? And don’t get me started on trains.”
It’s a set of circumstances that have driven the mayor to put forward a favoured rates scenario in his proposal that he doesn’t actually favour.
The long-term proposal going out for consultation contains three scenarios: one where Aucklanders pay less and get less, one where they pay more and get more, and a middle option with the most detail.
“I would have liked that central proposal to have lower rates increases in line with inflation, but we made choices in the past like borrowing to fulfil part of our budget holes that has meant that we need to plug the gap this year with bigger rate increases,” Brown said.
“We knew this would happen when those decisions were made, but we chose that option. And paying for the storm recovery work is not cheap.”
Brown’s proposal is for a rates increase in the first year of 7.5 percent, 3.5 percent in the second year, 8 percent in the third year, and no more than 3.5 percent each year after that.
That’s lower than the rates increases expected at a number of other councils around the country, like in Hamilton, where ratepayers are bracing for a jump of 25.5 percent.
But it’s how the proposal pays to buffer those rates shocks that some councillors stridently opposed.
“We made our decision in December last year that we are going to include a mix of spending, revenue, debt and big strategic asset options that can put Auckland Council group on the path to financial and physical resilience, and on track to bring rates increases in line with inflation by year four of the LTP,” Brown said.
While the majority of councillors supported sending the document out for consultation, Waitākere’s Ken Turner and Waitematā and Gulf’s Mike Lee voted against it, while Albany’s Wayne Walker and John Watson expressed discomfort about how it dealt with future options for the North Harbour Stadium.
Lee was adamantly against the potential asset sales the proposal allows – specifically changes to the port operating model, and shareholding in Auckland Airport.
The Auckland Future Fund would place $3 to $4 billion in airport shares and port leases in a separate wealth fund mandated to return 7.5 percent on investment.
Brown has championed the fund as a way to absorb future shocks and give the region economic resilience, but some councillors have expressed concerns over putting an unelected fund manager in control of public assets.
Lee called the proposal an unprecedented sale of public assets and said unless his fellow elected officials campaigned on potentially selling down assets, they had a democratic mandate to keep them under public ownership.
“One would have thought that Thatcherism, Rogernomics and Ruthanasia was long in the past – but sadly it’s not.
“I don’t think anybody in this room including the mayor mentioned they were considering selling public assets. Selling public assets in an election campaign is political death. Even central government politicians don’t go there. But here we are.”
Lee disputed the idea the council had a funding crisis, saying the problem instead came from wasteful spending.
“There were promises to fix Auckland and fix Auckland Council, and clearly it needs fixing.
“But my concern is I’ve heard members talk about a funding crisis or a funding shortage. We don’t have a funding crisis, we have a spending crisis. We have systemic failures in the model we have of outsourcing to ensure value for money.”
Brown and Lee have historically been in agreement on their desire to see the public purse mindfully spent.
Not so on asset sales.
“This is not about fixing Auckland, this is about asset-stripping Auckland, and I’ll be voting against that,” Lee said.
“Thank you for that voice out of early Russia,” replied the mayor.
But although the majority of councillors were happy to send the budget out to the people for the month-long consultation period beginning next Wednesday, even they found elements of the proposal tough to take.
It suggests there’s going to be some robust debate and difficult votes in the coming months as the final version of the budget is prepared for adoption in late June.
Waitakere’s Shane Henderson said he supported the proposal to go out, but had his own concerns about the levers being pulled within.
“It’s fair to say local government has a funding crisis. It’s a mismatch between the stuff people currently enjoy, not the stuff they need in the future; the stuff they currently rely on in their lives versus the money needed to pay for it.”
Henderson took the bitter pill of voting for airport share sales last year in the hope it would soften service cuts this year.
But since then, revenue streams from central government such as regional fuel tax and Crown-funded three waters reform have been cut.
This plus flood recovery and sewer mains fix-ups mean even left-leaning councillors may be more willing to stomach spending cuts this time.
“There will be some smiling people and some frowning, I suppose,” the mayor told his councillors.
Aucklanders are invited to give feedback on each element of the nearly 900-page proposal, including:
- Whether they like pay more, get more; pay less, get less; or a middle option
- Whether to invest airport shares and port lease revenue in the Auckland Future Fund
- How to use the port land
- Transport changes like funding road renewals, the introduction of a $50 weekly cap for public transport
- The future of North Harbour Stadium
- How local boards should be funded
- Whether targeted rates should be changed
