Auckland Councillors have voted to adopt an amended budget, agreeing to a partial sale of Auckland Airport shares and reaching a compromise on cuts to services, debt, and rates.
The council will sell around 7 percent of the council's 18.09 percent shareholding in the airport.
Auckland Mayor Wayne Brown said the amended plan "is the best, most prudent, balanced budget" for Auckland's residents.
"This budget represents a large reduction in the Council's debt, protects core services and keeps rate under control. It is the start of the work to fix the Council's budget and secure our financial sustainability."
Mayor Brown said the budget was the "most challenging and contentious" one the super city's council has seen in its history, following 29 workshops and over 90 hours of formal discussion.
"Most importantly, it deals with our most pressing issue - that we are spending more money than we are bringing in."
Key points
- Average residential rates rise of 7.7 percent
- Partial sale of shares in Auckland International Airport (AIA) to pay down around $865 million of debt, with a net funding benefit of $115 million over the next eight years
- $83 million of operating spending reductions
- $105 million of debt
- $10 million improvement in Ports of Auckland's net operating performance and dividend projections.
"It is clear we should not use debt to fill an operating budget hole – to me, that is the essence of financial mismanagement. Loading future generations of Aucklanders with debt because we didn’t have the courage to make hard decisions about living within our means, would have been unacceptable," Mayor Brown said in a statement.
Mayor Brown said Auckland Council amended its long-term plan to provide for a partial sell-down of its while maintaining a 10 percent shareholding.
He said the council agreed to proceed with the sale of around 7 percent of the council’s 18.09 percent shareholding (103,097,466) of council’s current shareholding of 266,328,912 shares in Auckland International Airport.
"This will allow us to realise around $865 million and immediately pay down debt. It will save a net $23 million of interest costs in 2023/24 and $115 million over the remaining term of the 2021-2013 Long Term Plan."
Though Mayor Brown said a partial sale will force the council to find another $37 million in operating cost savings or rates to balance the budget and fill its $365 million hole.
"This means we have had to reinstate $4 million of cuts for local board spending and will require the chief executive of Council to find another $5 million of cuts to spending, bringing the total savings for Auckland Council to $33 million," Brown said.
"We all want what is best for Auckland and that has guided our decision. It is different from the proposal we consulted on, and this reflects the feedback we have received from all Aucklanders."
He added a political working group will be stood up to determine the council's ownership objectives for the remainder of the AIA shares and long-term use of debt headroom.
