Most Auckland councillors do not yet agree on selling the council's 18 per cent shareholding in Auckland Airport. Photo / Michael Craig
OPINION
Community and arts funding will probably not be cut in the new Auckland Council budget. At least, not as much as proposed in Auckland Mayor Wayne Brown’s draft annual budget.
To allow this, rates will probably rise a little more than proposed and debt may rise a little more too. Brown indicated on Sunday he was reasonably comfortable with this and several sources suggest most councillors agree.
But there’s a catch. The plan relies on council selling its 18 per cent shareholding in Auckland Airport. And most councillors do not yet agree on that.
There are 21 votes around the council table and at this point perhaps nine councillors are against the sale. Several more are undecided. If the shares are retained, it will probably take very steep rates rises to prevent more cuts across the board.
The draft budget went out to public consultation in March and attracted a record number of submissions. Analysis of those submissions will be presented to councillors next week.
But it’s already clear there was strong support for funding to continue for a wide range of community and arts programmes.
Nobody, including Brown, expects the draft budget to survive without amendment. His office is working now to come up with revisions that enjoy majority support. This Wednesday, councillors will begin a series of closed-door workshops to thrash out the options.
Council will meet in public sessions on April 27 and May 25, but the big debate is scheduled for June 8. Decisions from that meeting will then be written into a final draft, to be formally adopted on June 29. That’s just two days before it’s due to come into effect, on July 1.
If council can’t agree by then, the Minister for Local Government, Kieran McAnulty, may consider calling in administrators to run the city. Nobody wants that.
The airport shares are a source of revenue for council: in the pre-Covid years, 2010-2019, the average annual return was $40 million. There was also a one-off payment of $100m, pushing that average to $50m.
But the shares also cost the council. This is because if the council sold the shares, it could retire some debt and spend the service payments on that debt elsewhere.
When the budget was drafted the cost of those shares was put at $87m per year. According to Deputy Mayor Desley Simpson, who supports the sale, inflation has now pushed it over $100m.
By this reckoning, the airport shares are a sinkhole. But will they remain so? The share value is rising, so the market has confidence in its worth. But the airport also faces extensive costs, both to make it more flood-resilient and for the proposed new terminal.
The mayor says the debate has revealed there are “rational” councillors and some who are “not so rational”. He means the people who agree with him and the ones who don’t, which is not actually the meaning of “rational”.
And the rates? The Herald has calculated that arts funding cuts in the draft budget equate to about $36m, while the full range of cuts to community programmes exceeds $100m.
But every 1 per cent increase in rates will produce only about $20m in revenue. So rates rises on their own can’t fully reverse the community and arts funding cuts or fill the budget hole if the airport shares are retained.
The draft budget proposes a net rates rise of 5.5 per cent. The gross rise is 8 per cent, but there will be a pause in the water and environmental targeted rates, which is why the net figure - what we will actually pay - is lower.
That’s less than the rate of inflation, which is 7.2 per cent.
On TVNZ’s Q&A programme on Sunday, Brown was asked why he didn’t raise rates to match inflation. He responded: “That may well be what comes out of this.”
That was a clear indication he’s not opposed to it. Other sources have confirmed this.
If the net rates increase goes up to 7.2 per cent, the average increase per household will be $60 per quarter, or about $4.60 a week.
In the Ōrākei ward, which has the highest household rates and the most vocal opposition to rates rises, they’d pay an average $92 more per quarter: $7 a week.
In the wards with the lowest rates, including Manurewa, Ōtara-Papatoetoe and Franklin, they’d pay $46 more per quarter: $3.50 a week.
The furore about community and arts funding has skewed attention away from other important areas. Those rates increases will not do much to improve public transport and they probably won’t help to make the city safer for walking and cycling, either.
In other words, despite existing policy, climate action, safer streets and reducing congestion by increasing the appeal of buses have become nice-to-haves. They’re being sacrificed.
So are staff. In the head office and widely in the rest of the organisation, there will be significant staff cuts and there’s very little pushback from councillors about this. “No one is even talking about it,” one told me.
However, because of factors like these, some councillors are arguing for even higher rates rises. A 10 per cent net rise would add increase the average household’s quarterly bill by $84 and add $200m to the council’s existing revenue. That’s almost twice what is proposed in the draft budget.
Those councillors are not in the majority. But with the mayor keen on that airport sale, there is much horse-trading still to be done.
Can Wayne Brown put together a coherent budget? His style was in sharp relief last week at the Herald’s Project Auckland lunch on Tuesday, and again following the release of the independent inquiry into the council’s handling of the anniversay weekend floods.
On both occasions he talked a lot about what he’d done and is doing and a lot about what he can’t be held accountable for. He thinks and talks about “me, me, me”.
Most councillors and officials think of themselves as having some degree of collective responsibility as part of a team. Brown doesn’t. There’s no “we”. When he does refer to others, almost invariably it is to criticise them.
At the Project Auckland lunch, he made jokes about his own transport bosses, who were in the room and in no position to respond.
And after the floods report, he complained about almost everyone: his chief executive, his predecessor, various councillors, other officials and the Government.
There’s no doubt he inherited a dysfunctional emergency management setup from former mayor Phil Goff. Brown is right that he shouldn’t be blamed for the systemic failure.
But no one has said he should be.
What we wanted from him then and still want from him now is leadership. It’s not too much to ask of a mayor that they bring people together to work in the public interest as a functional team.
He says he’s “not a hugger”. But no one has said he should be that, either. It’s an absurd way to describe the core leadership skill of instilling public confidence in the face of disaster.
This goes to the budget process. Brown has to produce a plan that both adds up and wins majority support from councillors. He doesn’t have to hug anyone. He just has to respect them.
Sadly, the flood report exposed just how toxic the atmosphere in some parts of council has become. It was epitomised by what happened between the mayor and the chief executive, Jim Stabback.
Stabback was in the office through the day; Brown wasn’t. When Brown turned up at 4pm, Stabback went home. While the city was drowning in the worst floods on record, he texted the mayor once. There is no record of them conferring at any other time that night.
What do we say about this? How about: grow up, the lot of you. This is our city too.
Around 18,500 public servants received a pay rise in the quarter.