Auckland Council’s Governing Body will meet to discuss the updated mayoral proposal for the Annual Budget 2023/2024 and make decisions for the upcoming financial year.
Auckland councillors have voted down an alternative budget plan put up by councillor Lotu Fuli by 13 votes to 8.
Councillors have now broken for lunch on the second day of an exhaustive budget meeting at the Auckland Town Hall.
Fuli’s plan was to retain the council’s airport shares and borrow a further $60 million in debt to plug the loss of income from holding the 18 per cent shareholding.
Despite getting the support of most left-leaning councillors, three councillors on the left - Shane Henderson, Richard Hills and Julie Fairey - did not back the plan.
Mayor Wayne Brown’s compromise to break the stalemate over Auckland Council’s budget by selling only part of its shares in the airport was earlier slammed as a “cop out” as tempers rise around the debating table.
Disagreement over debt, rates rises and the financial management of council has dominated discussion as the budget debate entered its 10th hour and second day.
“How is it we’ve been able to be so financially imprudent for so long?,” a visibly-frustrated Councillor Wayne Walker asked.
He said council’s expenditure relative to its income is “out of control”.
Councillor Greg Sayers said taking on more debt has been the approach under Mayors Len Brown and Phil Goff and claimed Aucklanders “are sick of it”.
This morning’s session opened with Fuli saying council needed to keep the airport shares on behalf of Aucklanders.
That was backed up by Councillor John Watson, who called Brown’s proposal to sell only part of the shares a “cop out.” Brown’s new proposal is to sell 8.09 per cent of the 18.09 per cent holding, which he said would achieve savings of $28 million next year, instead of $60m from selling all the shares.
Watson called that suggestion a “back door” that will inevitably lead to a full sale of all shares in the future at a time when investors were “lining up to by the stock”.
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Just before the meeting adjourned at 5pm yesterday without any decisions on Brown’s latest proposal, Fuli tabled an alternative proposal, seconded by her Manukau colleague Alf Filipaina, to consider selling the shares as part of next year’s 10-year budget, holding household rates to 6.8 per cent and increasing debt from the $100m in Brown’s proposal to $160m.
It is understood Fuli’s amendment has been worked up by 10 councillors opposed to the sale of the airport shares, valued at $2.2 billion.
If Fuli’s amendment passes today with 11 or more votes, it will seal the budget and Brown’s proposal will not proceed.
“I’m proposing we will fill the gap with a general rates increase of 7.7 per cent for the average residential property,” said Brown - 1 per cent higher than his previous figure of 6.7 per cent to hold the household increase at the rate of inflation,” Brown said after tabling his latest proposal yesterday.
The new overall rate rise is 11 per cent, with businesses paying more than households.
He has also proposed cutting local boards’ discretionary funds by $4m and requiring council chief executive Jim Stabback to find another $5m in cuts.
Auckland Mayor Wayne Brown (left) wants chief executive Jim Stabback to come up with another $5 million of savings in his latest budget proposal. Photo / Jason Oxenham
Earlier in the day, council group chief finance officer Peter Gudsell said increasing debt is a short-term answer that could make the remainder of the year or next year harder and was not a prudent approach.
Gudsell said debt “reduces headroom to deal with future shocks”.
He called it “not a credible or prudent approach to financial management” and said it would only defer decisions on how to close the budget gap.
In an unusual move, Brown gauged the mood of the room before lunch by giving each councillor five minutes to say what kind of budget they would like, adjourning the meeting for an “open workshop” for councillors to speak freely without jeopardising their speaking rights during the formal business of the budget meeting.
Both sides of the airport debate gave impassioned speeches, with Mike Lee calling the sale the biggest asset sale in Auckland’s history and Maurice Williamson saying even the good times are bad for holding the shares.
Williamson said more costs are coming down the pipeline for the council, warning that he had been told the final cost of the City Rail Link will be $7.5b instead of $5.5b.
“We do not need to own an asset that is not washing your face,” Williamson said.
Councillor Kerrin Leoni at yesterday's meeting. Photo / Jason Oxenham
Councillor Kerrin Leoni said the airport shares should only be sold as a last resort, and she would be happy to consider a small increase in council debt.
Several councillors said a lot of the issues - the sale of the shares, spending cuts, revenue and debt - would be better dealt with in the 10-year budget, which comes next year.
Deputy Mayor Desley Simpson said Aucklanders deserve a budget that doesn’t hurt too much, and that’s for both residential and business ratepayers.
She said inflation and Reserve Bank rate rises had heaped extra costs on the council.
While the council had expected these as potential costs, devastating weather in summer had made the situation much more difficult, she said.
Simpson said councillors should be careful in raising rates too much because of the cost-of-living expenses people are facing for things like transport and food costs and paying mortgages.
Councillor Richard Hills said he didn’t like any of the budget levers - spending cuts, raising debt, higher rates or selling the airport shares.
“The focus for me was reducing the level of those cuts to our community, reducing the staff cuts, reducing what I feel is mean cuts to what is going on in the city, the environment ... I could keep going on,” he said.
The North Shore councillor said public feedback on the budget was the biggest on record, with more than 70 per cent of people saying they weren’t happy with the scale of the cuts.
Last month, Brown reduced suggested deep cuts to arts and social services, including the Citizens Advice Bureau, following public feedback.
In a late twist just hours before yesterday’s meeting, Albany councillor Wayne Walker declared he is the beneficiary of a $3m shareholding in Auckland Airport held in the estate of his late father.
Councillor Wayne Walker is a beneficiary of a $3 million parcel of Auckland Airport shares. Photo / Jason Oxenham
Walker and two other councillors with family links to airport shares, Julie Fairey and Chris Darby, were cleared by council staff and the Office of the Auditor-General to vote on the share issue.
Brown closed the meeting by saying it “is a very hard budget and I want to ensure that we take our time to work through the process properly”.
“I have always said it may take a couple of days of constructive debate. There is no issue with that, we are simply adjourning to another day,” he said.
