Council goes global to raise money

Auckland Council executives have travelled to New York, London, Zurich and Tokyo to arrange finance to pay for items ranging from trains to office furniture. Photo / Paul Estcourt

Servicing debt and organising loans takes executives to world's financial centres.

Auckland Council executives have travelled to New York, London, Zurich and Tokyo to arrange finance to pay for items ranging from trains to office furniture.

The council chattels are among the $1 billion of items the council bought on tick in the past year, to be paid off over 30 years through rates.

Of the $1 billion borrowed, a $95 million deposit on a fleet of electric trains was the most tangible capital item for ratepayers.

The council's transport body spent $373 million building new roads and renewing others, more than $200 million was spent on improving water and stormwater assets and $135 million buying land and making improvements to parks and sports fields.

The central city benefited from the $10 million upgrade to the ASB Theatre at the Aotea Centre, completion of the art gallery and Viaduct Events Centre ($9 million and $4 million respectively).

As well, $27 million of work was carried out at Wynyard Quarter.

The council also borrowed $10 million to buy library books, $11m for computers, $5 million for motor vehicles and another $5m for office furniture.

To borrow the money and maintain the Super City's fiscal position, chief finance officer Andrew McKenzie and other finance staff visited some of the world's financial centres in the past year meeting banks and investors.

Councillor Cameron Brewer said the $1 billion of debt run up in the past year was going towards "bits and bobs" and not big projects that would improve Auckland's prospects.

"Most ratepayers accept the concept of council debt if it's prudent and spent strategically on big capital intergenerational projects," he said.

"In the past year we've borrowed nearly $3 million a day, with the money being scattered across the organisation."

Of the $1 billion of new debt, about a third was spent by the council and two-thirds by council-controlled organisations. It takes the council's overall debt from $4 billion to $5 billion.

Mayor Len Brown said he was concerned about keeping control of council debt while planning and investing for the future of Auckland.

"The international credit ratings agencies share my confidence in the financial prudence being shown by Auckland Council."

Meanwhile, councillors next week begin discussing next year's budget. With inflation running at 0.8 per cent and the proposed rates increase at 5.2 per cent - a 550 per cent difference - Mr Brown has a big challenge at keeping his promise to hold rates near the rate of inflation.

Council executives have asked their departments, local boards and council-controlled organisations to trim their budgets by 3 per cent.

Hi ho, we owe ...

Big items
$188m on road repairs
$185m on new roads
$135m on parks/open space/sports fields
$104m on water and wastewater repairs
$95m on electric trains

Small stuff
$10m on library books
$9m on Viaduct Events Centre
$5m on motor vehicles
$5m on office furniture.