Auckland Council proposes selling its 18 per cent shareholding in Auckland International Airport as a central plank in a budget proposed by Mayor Wayne Brown for the year 2023-24. Photo / Brett Phibbs
Auckland Council proposes selling its 18 per cent shareholding in Auckland International Airport as a central plank in a budget proposed by Mayor Wayne Brown for the year 2023-24. Photo / Brett Phibbs
OPINION
Auckland is at a crossroads with Auckland Council’s budget negotiations.
The question is, how can we rebuild a thriving, vibrant city beyond the Covid-19 pandemic on sound financial foundations? It’s up to Auckland councillors to pick a road to get the city back on track.
The original Budget proposal,put forward by Mayor Wayne Brown, says we’re in dire financial straits. It says we have a $295 million fiscal hole. The proposal sets out four options: spending cuts, rate increases, selling Auckland airport, or borrowing.
I was concerned when I first read this. I love Tāmaki Makaurau Auckland. I spent my childhood here; I live here; and I’ve seen near where I live in Ōtāhuhu how council cuts can leave streets and footpaths neglected.
With a group of like-minded people – with backgrounds in local government, economic policy and community organising – we set up “A Better Budget for Auckland”.
Our alternative budget shows the council’s proposal is misleading and we highlight other options on the table. After reviewing recent financial documents, we have demonstrated there isn’t the kind of fiscal crisis that Brown had claimed.
Illustration / Rod Emmerson
Auckland Council is well below its debt ceiling with debt tracking downwards, and very good credit ratings. According to the proposal, most of the Council’s borrowing is at fixed interest rates, not subject to rates going up.
What this Budget proposal is really about, when you clear away the jargon and the bluster, is creating a sense of panic to persuade people that policies that are normally unpopular – like spending cuts and asset sales – are a necessity.
Economists such as Bernard Hickey and the CTU’s Craig Rennie agreed with us.
We suggested a different combination of borrowing and rates, and said the key was finding new revenue streams to ensure in future years Auckland Council has a stable income.
Revenue streams, such as those that can grow out of investment into arts and cultural organisations and kaupapa, are within reach and come with a range of benefits to our communities beyond financial ones.
The council’s now reconsidering its options. But again those pushing for cuts and asset sales want to tell us we have fewer choices than we really have.
Auckland Council can borrow more. The current proposal suggests $75 million in borrowing and notes that council debt can go up to $140 million.
The truth is the council could borrow more than $140 million: that’s just the earlier projected borrowing limit from the Long-Term Plan.
Yes, borrowing carries interest rate costs and, if done the wrong way, could risk our credit rating. But with a credible plan and new revenue streams, these worries can be managed.
A rates rise just above inflation levels, to 10 per cent, would bring in $130 million. Then, $165 million in borrowing, coupled with this rates adjustment, would meet the shortfall.
That’s just one way forward. There are also different paths we could take, involving new parking charges, or targeted rates, or combinations of all of the above.
That’d mean we wouldn’t have to sell our stake in the airport: a strategic asset, which has been projected to bring in dividends and revenue, and which we must keep in public hands to ensure effective co-ordination of transport hubs when we face health and climate emergencies in future.
India Logan-Riley. Photo / Carl Johan Utsi
Some in the council leadership have been claiming that keeping the airport costs money, and at least one commentator echoed this line, saying: “if the council sold the shares, it could retire some debt and spend the service payments on that debt elsewhere.” That’s an accounting trick, a sleight-of-hand, as accountant and tax expert Terry Baucher has pointed out.
Every public asset has an opportunity cost – if we sold any public asset we “could retire some debt and spend the service payments on that debt elsewhere”.
It doesn’t mean we should sell it, especially when the debt crisis has been overstated.
Feedback from council consultation will shortly be collated to inform these choices. Our community contacts suggest some of the council materials were leaning towards cuts and asset sales, such as a question asking which three things members of the public would want to keep if they had to cut something.
Nevertheless, the feedback will be one piece to add to the process of fitting this puzzle together.
The council leadership would like to have you believe there’s only road in front of us at this crossroads. Don’t believe it. We have choices.
It’s just not higher rates versus asset sales. With a proper, informed debate – and a better budget – we can build a thriving, healthy city we can all be proud of.
- India Logan-Riley (Ngāti Kahungunu) is a climate change adviser, and was recipient of the 2021 Stanford Bright Award and a semi-finalist in the 2023 New Zealand Environmental Hero of the Year category of the Kiwibank New Zealander of the Year Awards.
