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Finance and
Performance Committee
16 July 2020
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Emergency
Budget 2020/2021 - local board input
File No.: CP2020/08901
Te take mō te
pūrongo
Purpose of the report
1. To provide an overview of local board feedback on the proposals from
the Emergency Budget 2020/2021 consultation.
Whakarāpopototanga matua
Executive summary
2. As part of Auckland Council’s shared governance model, local
boards have a legislative role to provide input on regional plans, such as the
annual plan. For this year’s Emergency Budget, local boards achieve this
in two key ways:
· Providing feedback on regional proposals
· Preparing local board agreements to be
included in the Emergency Budget (Volume 2) – this includes local board
projects, budgets, performance measures and local fees
and charges for 2020/2021.
3. The
annual plan was first consulted on in February/March 2020 (Consultation part
1). Since this consultation was undertaken, the COVID-19 pandemic has exerted
significant pressure on the council’s financial position. This will have
flow on effects for the proposed budget for the 2020/2021 financial year. The
council has considered what those impacts are likely to be and have asked
Aucklanders for their views on aspects of the proposed budget, now referred to
as Emergency Budget 2020/2021, through a second round of consultation
(Consultation part 2). This was carried out from 29 May to 19
June 2020.
4. Each local board has now considered community feedback
received from their local area and resolved feedback on the Emergency
Budget for the consideration of the Governing Body.
5. Local boards will adopt their local board agreements between 20 to
24 July 2020 and the Governing Body will then adopt the Emergency Budget,
including the 21 Local Board Agreements, on 30 July 2020.
6. This
report summarises feedback from local boards and focuses on common themes. As
such, it does not include all of the matters raised in local board resolutions.
A complete set of the local board resolutions is provided in Attachment A.
7. Key
themes arising from those local boards that resolved on regional issues
include:
· local
boards unanimously supported the proposed 3.5 per cent general rates increase.
· 19
of the local boards provided feedback on the proposed introduction of a rates
postponement scheme and the suspension of the Accommodation Provider Targeted
Rate, which they both unanimously supported.
· local
boards accept most of the savings proposals for the Emergency Budget 2020/2021,
including in the transport, environmental, and local board funding that are
outlined in this report.
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Ngā tūtohunga
Recommendation/s
That the Finance and
Performance Committee:
a) consider
feedback from local boards when making recommendations to the Governing Body
on the Emergency Budget 2020/2021.
|
Horopaki
Context
8. An annual plan sets out Auckland Council’s priorities for a
financial year and how the council plans to pay for them. The Governing Body is
responsible for the regional elements of the annual plan and local boards
develop annual local board agreements which are agreed between the local boards
and Governing Body, and are included in the annual plan.
9. Local
boards have a statutory responsibility for identifying and communicating the
interests and preferences of the people in their local board area in relation
to the content of the strategies, policies, plans, and bylaws of Auckland
Council. The Governing Body also has a statutory obligation to consider the
views and preferences of the local boards, if the decision affects, or may
affect the responsibilities or operations of the local board or the well-being
of communities within its local board area.
10. Auckland
Council publicly consulted from 21 February to 22 March 2020 to seek community
views on the proposed Annual Budget 2020/2021 (Consultation part 1).
11. Since
this consultation was undertaken, the COVID-19 pandemic has exerted
considerable pressure on the council’s financial position, which will
have flow on effects for the proposed budget for the 2020/2021 financial year.
Given the new financial realities facing Auckland, work has been undertaken to
adjust the proposed budget, now referred to as Emergency Budget 2020/2021.
12. The council has undertaken further public consultation with
Aucklanders for their views on Auckland Council’s proposed ‘Emergency
Budget’ in response to the financial impacts of COVID-19 (Consultation
part 2), which included considering whether to adopt a 2.5 per cent rather than
3.5 per cent general rates increase for the 2020/2021 financial year, among a
suite of other measures aimed at offering support to all ratepayers, including
businesses, facing hardship. This was carried out from 29 May to 19 June
2020.
13. Overall Auckland Council received feedback from 34,915 submitters in
the consultation period. This feedback was received through:
· written feedback
–hard copy and online forms, emails and letters
· over the phone.
14. Local boards considered consultation feedback from their local board
area and then passed resolutions providing their input.
15. This
report provides an opportunity for the local boards to provide input on the
proposed Emergency Budget, and for the Governing Body (through the Finance and
Performance Committee) to consider the views expressed by the local boards.
Tātaritanga me ngā
tohutohu
Analysis and advice
16. After considering feedback from their communities, local boards
resolved on their input at their business meetings between 7 - 10 July 2020.
This report summarises feedback from local boards and focuses on common themes.
As such, it does not include all the matters raised in local board resolutions.
The full set of local board resolutions are provided in Attachment A (local
board resolutions on the Emergency Budget 2020/2021).
17. As part of the consultation, Aucklanders were asked for their views
on three key proposals:
· average general
rates increase for 2020/2021 of either 2.5 per cent or 3.5 per cent
· rates postponement
for ratepayers impacted by COVID-19
· suspending the
targeted rate paid by accommodation providers until 31 March 2021.
18. The Emergency Budget 2020/2021 consultation document gave an
overview of the council’s challenges due to the COVID-19 pandemic, and
how the council planned to respond to these in the 2020/2021 financial year.
The supporting information provided more detail on the savings proposals.
19. Local boards that resolved on regional issues all supported the
proposed 3.5 per cent general rates increase and, noting concerns, conditions
and exceptions, accepted most of the savings proposals. Nineteen local boards
supported the proposed introduction of a rates postponement scheme and the
suspension of the Accommodation Provider Targeted Rate.
General rates increase for 2020/2021 of either 2.5 per
cent or 3.5 per cent
20. Aucklanders
were asked about a proposed average general rates increase of either 2.5 per
cent or 3.5 per cent for 2020/2021.
21. Local
boards unanimously supported the proposed 3.5 per cent general rates increase.
22. Two
local boards specified conditions for their support. Howick Local Board on the
proviso that the reserves and public open space properties, that are listed
subsequently in its resolutions are not sold. Rodney Local Board predicated on
the allocation of a minimum of $2 million to the Auckland Transport Unsealed
Road Improvement Programme.
Rates postponement for ratepayers impacted by COVID-19
23. Aucklanders were asked about a proposal to
introduce a COVID-19 Rates Postponement Scheme. All local boards that provided feedback on
this proposal supported the introduction
of a COVID-19 Rates Postponement Scheme. These local boards are: Albert-Eden, Aotea / Great Barrier,
Devonport-Takapuna, Franklin, Henderson-Massey, Howick, Kaipātiki,
Māngere-Ōtāhuhu, Manurewa, Maungakiekie-Tāmaki,
Ōrākei, Ōtara-Papatoetoe, Papakura, Puketāpapa, Upper
Harbour, Waiheke, Waitākere Ranges, Waitematā and Whau local boards
(19 local boards).
24. Five local boards did not support the proposed administration fee or
suggested the interest rate applied should be as low as practicable. These
local boards are: Albert-Eden, Devonport-Takapuna, Maungakiekie-Tāmaki,
Kaipātiki and Waitematā. There were also requests for an extension of the application period.
25. Hibiscus and Bays Local Board requested that the council be
proactive in informing the public of the current rates relief options,
including the central government’s schemes, that are already available.
Rodney Local Board did not provide feedback on this proposal.
Suspending the targeted rate paid by
accommodation providers
26. Aucklanders were asked about a proposal to
suspend the targeted rate paid by accommodation providers (APTR) until 31 March
2021. All local boards that provided feedback on this proposal supported the
suspension of the targeted rate paid by accommodation providers. These local boards are: Albert-Eden, Aotea
/ Great Barrier, Devonport-Takapuna, Franklin, Henderson-Massey, Howick,
Kaipātiki, Māngere-Ōtāhuhu, Manurewa,
Maungakiekie-Tāmaki, Ōrākei, Ōtara-Papatoetoe, Papakura,
Puketāpapa, Upper Harbour, Waiheke, Waitākere Ranges, Waitematā
and Whau local boards (19 local boards).
27. However, Devonport-Takapuna Local Board does not support the
suspension being applied to online accommodation providers (ie: Airbnb,
Bookabach). Waiheke Local Board reiterated its request that Waiheke Island be
moved permanently from zone B to zone C, to achieve equity with other rural
local board areas such as Franklin and Rodney.
28. Franklin and Howick Local Boards are interested in how the impact on
ATEED budgets is to be mitigated and consequential effects on local economic
recovery initiatives. Waitematā Local Board suggested the suspension
should be extended to the end of 2020/2021 financial year.
29. Hibiscus and Bays Local Board noted that a high number (69 per cent)
of submitters from its area are in support of the suspension of the
Accommodation Provider targeted rate. Rodney Local Board did not provide
feedback on this proposal.
Savings proposals
30. Local boards have provided feedback on the wide range of proposals,
a complete set of the local board resolutions are provided in Attachment A.
Below are the common themes from their input.
Locally Driven Initiatives (LDI) and One Local
Initiatives (OLI)
31. Eight local boards supported the proposed reductions in LDI funding
to varying extents:
· Franklin Local Board
was the only local board to fully support the proposal
· Māngere-Ōtāhuhu
Local Board supported it up to a maximum reduction of 15 per cent
· Aotea / Great
Barrier, Devonport-Takapuna, Rodney, Upper Harbour and Waiheke Local Boards
supported a maximum of 10 per cent reduction
· Waitematā Local
Board supported a maximum of 5 per cent reduction.
32. Seven local boards do not support the proposed reductions in LDI
funding. These local boards are: Henderson-Massey, Howick, Kaipātiki,
Manurewa, Ōtara-Papatoetoe, Papakura and Waitākere Ranges Local
Boards.
33. The main reasons given for this are:
· LDI funding makes up
a very small component of the total Auckland Council budget but has high impact
for local communities.
· LDI funds important
front-line services, community organisation and volunteer groups, the viability
of which will be irreparably damaged through LDI reductions
· local boards may
need to utilise LDI operational budgets to ‘top up’ service levels
reductions and cuts that are likely to occur across its asset-based services
(ABS) operational budget.
34. Maungakiekie-Tāmaki Local Board also expressed some of the
concerns above and a concern that the cuts and concessions being made to local
board funding as part of the Emergency Budget will become the baseline for
future years.
35. In addition to this, four local boards (Kaipātiki,
Ōtara-Papatoetoe, Puketāpapa and Rodney Local Boards) do not support
a deferral of uncommitted LDI capital projects. Hibiscus and Bays Local Board
was the only local board to support this proposal.
36. Seven local boards do not support a proposed delay to all OLIs
unless the works are already contractually committed. These local boards are:
Kaipātiki, Papakura, Rodney, Upper Harbour, Waiheke, Waitākere Ranges
and Whau local boards.
Transport
37. The majority of local boards that provided feedback on the proposed
temporary reduction or deferral of community safety funding did not support it.
These local boards are: Aotea / Great Barrier, Devonport-Takapuna, Henderson-Massey,
Howick, Kaipātiki, Māngere-Ōtāhuhu,
Maungakiekie-Tāmaki, Manurewa, Ōtara-Papatoetoe, Papakura,
Puketāpapa, Rodney, Upper Harbour, Waiheke, Waitākere Ranges,
Waitematā and Whau local boards (17 local boards).
38. Albert-Eden Local Board suggested funding raised by the regional
fuel tax and earmarked for road safety projects should not be deferred and
should be used during 2020/2021 for road safety projects, and note the strong
support for addressing road safety received through Albert-Eden submissions.
Hibiscus and Bays Local Board also noted the concerns raised by submitters.
39. Only Franklin Local Board supported this proposal but requested that
implications from the reduction to community safety funding are informed by
local priorities as represented by local boards.
40. The majority of local boards provided feedback on the proposed
temporary reduction or deferral of the Local Board Transport Capital Fund
(LBTCF), however their feedback was divided:
· Support the
proposal: Franklin, Henderson-Massey, Hibiscus and Bays,
Māngere-Ōtāhuhu and Waitākere Ranges Local Boards. Howick
Local Board support this proposal on the proviso that the Auckland Transport
Community Safety Fund be retained. Maungakiekie-Tāmaki Local Board support
the proposal as long as the full funding, including deferred entitlements,
continues to be available to local boards in the remainder of the term as part
of the Long-Term Plan. Waitematā Local Board notes that the fund is a
three-year budget and therefore recommends that the full pro rata budget is
reinstated after this financial year, and recommends the $5m for 2020/2021 is
allocated across the 21 local boards and is utilised to achieve short term
tactical urbanism (eight local boards supporting the proposal).
· Do not support the
proposal: Aotea / Great Barrier, Devonport-Takapuna, Kaipātiki,
Ōrākei, Ōtara-Papatoetoe, Papakura, Rodney, Upper Harbour,
Waiheke and Whau Local Boards (10 local boards).
Environment
41. The majority of local boards that provided feedback on the proposed
deferral of Natural Environment Targeted Rate (NETR) projects did not support
it. These local boards are: Albert-Eden, Aotea / Great Barrier,
Henderson-Massey, Hibiscus and Bays, Howick, Kaipātiki, Ōrākei,
Rodney, Upper Harbour, Waiheke, Waitākere Ranges and Waitematā local
boards (12 local boards).
42. Māngere-Ōtāhuhu and Ōtara-Papatoetoe Local
Boards also noted this will be a loss to the local area and community and their
submitters are concerned about the impact of delaying projects designed to
address or limit environmental degradation.
43. Maungakiekie-Tāmaki Local Board endorse in principle the
proposal so long as the revenue collected is spent as it was intended. Franklin
Local Board also support the proposal, however, note that pest management and
Kauri dieback management in the Hūnua Ranges should be prioritised.
44. All of the local boards that provided feedback on the proposed
reduction in preventative maintenance and pest eradication did not support it.
These local boards are: Aotea / Great Barrier, Devonport-Takapuna, Franklin,
Henderson-Massey, Hibiscus and Bays, Howick, Kaipātiki, Rodney, Waiheke,
Waitākere Ranges, Waitematā and Whau local boards (12 local boards).
45. All of the local boards that provided feedback on the proposed
deferral of foundation work for climate change interventions did not support
it. These local boards are: Aotea / Great Barrier, Henderson-Massey,
Kaipātiki, Ōtara-Papatoetoe, Puketāpapa, Upper Harbour, Waiheke,
Waitākere Ranges, Waitematā and Whau local boards (10 local boards).
46. All of the local boards that provided feedback on the proposed
deferral initiatives intended to improve Māori outcomes did not support
it. These local boards are: Aotea / Great Barrier, Franklin, Henderson-Massey,
Kaipātiki, Māngere-Ōtāhuhu, Ōtara-Papatoetoe,
Papakura, Waiheke and Waitematā Local Boards (nine local boards).
Other key topics for local boards
47. The majority of local boards that provided feedback on the proposed
suspension of inorganic waste collection until 1 July 2021 do not support it.
These local boards are: Hibiscus and Bays, Howick, Kaipātiki, Manurewa,
Maungakiekie-Tāmaki, Ōtara-Papatoetoe, Papakura and Waiheke local
boards (eight local boards). However, Manurewa Local Board recommended the
council investigate whether the traditional, annual inorganic waste collection
was more cost effective than the current booking system.
48. Henderson-Massey provisionally supported the proposal, noting that
providing alternatives, e.g. giving households a ‘voucher’ to dump
one trailer load of waste per year at a transfer station, could mitigate the
negative effects of a reduction.
49. The majority of local boards that provided feedback on the proposed
reduced maintenance spend, which included reduced open space standards, closing
public toilets, removing litter bins, public spaces do not support it. These
local boards are: Franklin, Henderson-Massey, Hibiscus and Bays, Howick,
Kaipātiki, Puketāpapa and Waiheke Local Boards (seven local boards).
Whau Local Board also raised concerns around the potential closure of public
toilets and removal of rubbish bins. Waitematā Local Board do not support
closing public toilet facilities to achieve operational savings, however,
support the reduction of open space standards, where appropriate.
Maungakiekie-Tāmaki Local Board recommend using an equity approach when
determining the reduction in service levels for open and public spaces, as this
takes into consideration levels of deprivation, accessibility and need.
50. The majority of local boards that provided feedback on the proposed
reduction in major events funding support it. These local boards are: Aotea /
Great Barrier, Franklin, Henderson-Massey, Kaipātiki, Puketāpapa,
Waiheke, Waitākere Ranges and Waitematā Local Boards (eight local
boards). In addition, Maungakiekie-Tāmaki and Ōtara-Papatoetoe Local
Boards both opposed any further funding for the America’s Cup, and
Kaipātiki Local Board also included that further savings could be found in
the funding of the America’s Cup.
51. Seven local boards support or accept the concept of asset recycling
in-principle whilst making it clear that they do not support any proposal to
remove decision making on asset recycling from the Governing Body, and that
local board views and preferences should be sought formally as part of any
future decisions. These local boards are: Aotea / Great Barrier,
Devonport-Takapuna, Franklin, Māngere-Ōtāhuhu,
Ōtara-Papatoetoe, Papakura and Upper Harbour Local Boards.
52. Three local boards do not support the concept of asset recycling.
These local boards are: Kaipātiki, Waitākere Ranges and Whau Local
Boards.
53. Local board feedback on specific properties proposed for sale is
included in a separate report.
Tauākī whakaaweawe
āhuarangi
Climate impact statement
54. Some of the
proposed projects in the Emergency Budget may have climate impacts. The climate
impacts of any projects Auckland Council chooses to progress with as a result
of this, will be assessed as part of the relevant reporting requirements.
55. Some of the
proposed projects in the Emergency Budget will be specifically designed to
mitigate climate impact, build resilience to climate impacts,
and restore the natural environment.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
56. The changes
proposed in the consultation had been communicated to and agreed on by the
following departments or business units of the Auckland Council group prior to
this consultation:
·
Waste Solution
·
Healthy Waters
·
Regulatory Services
·
Parks Sports and Recreation
·
Arts Community and Events
·
CCO/External Partnerships
·
Auckland Tourism Events and Economic
Development.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
57. Local boards have been involved throughout the development of the
Emergency Budget, including:
· local board chairs attending Finance and Performance Committee
workshops on the Emergency Budget
· engaging with communities on the Emergency Budget.
58. Local board views and feedback on the regional aspects of the
Emergency Budget are provided in this report.
Tauākī whakaaweawe
Māori
Māori impact statement
59. Many local board decisions are of importance to
and impact on Māori. The annual plan, including local board
agreements, are important tools that enable and can demonstrate the
council’s responsiveness to Māori.
60. Many local boards, as outlined in their
resolutions, considered the impacts on Māori
within their local board area.
Ngā ritenga
ā-pūtea
Financial implications
61. The annual plan is a statutory process which must be completed every
year. The council budget provides for the resourcing to deliver this project.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
62. The Governing Body needs to consider feedback from local boards as
this is a legislative requirement and part of Auckland Council’s shared
governance model.
Ngā koringa ā-muri
Next steps
63. The Governing
Body will make decisions on the Emergency Budget (based on recommendations from
the Finance and Performance Committee) on 16 July 2020.
64. Local boards will adopt their local board agreements between 20 to
24 July 2020 and the Governing Body will then adopt the Emergency Budget on 30
July 2020.
Ngā tāpirihanga
Attachments
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No.
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Title
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Page
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a⇩
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Annual Budget 2020/2021 Emergency Budget - Local Board
Feedback
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13
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Ngā kaihaina
Signatories
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Author
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Beth Corlett - Advisor Plans & Programmes
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Authorisers
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Louise Mason – General Manager Local Board
Services
Phil Wilson - Governance Director
Kevin Ramsay - Acting Group Chief Financial Officer
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Finance and
Performance Committee
16 July 2020
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Budget decision-making for 2020/2021
File No.: CP2020/09431
Te take mō te
pūrongo
Purpose of the report
1. To
provide updated analysis and advice to support final decision-making for the
Emergency Budget 2020/2021 following public consultation on options for average
general rates increases of either 3.5% or 2.5%.
Whakarāpopototanga matua
Executive summary
2. The
Auckland Council group is experiencing the unprecedented impacts of the
COVID-19 crisis and the flow-on impacts on economic activity.
3. Consultation
materials on a draft Emergency Budget were adopted by the Governing Body on 28
May 2020. Along with the options and implications of different rates increases,
these documents explained the central budget issue of a revenue shortfall for
2020/2021 of the order of $500 million, and set out in detail a range of
proposed mitigating actions. This included temporarily elevated debt levels, capital
expenditure deferrals, temporary reductions in operating service levels and
asset recycling.
4. Public consultation on the
proposed draft Emergency Budget with options for either 3.5 per cent or 2.5 per
cent rates increases opened on 29 May 2020 and closed on 19 June
2020. A series of workshops on
key budget issues and savings options were
held in the past month, where more information and
answers to queries from members of this committee were
provided to support final decisions.
5. This report sets out key
principles to guide budget decision-making, staff advice on the use of the
available levers, the key budget changes consulted on and a summary of public
feedback.
6. Since
the draft budget was adopted, finance staff have reviewed and updated group
budget projections for 2020/2021 based on the latest information. Overall, this
budget review has identified $40 million of additional short-term budget
capacity which is mainly due to a more favourable revenue outlook due to revised
assumptions about social distancing requirements and a slightly improved
economic outlook.
7. If
nothing else changed, this additional capacity would allow $40 million of
additional spending to proceed in 2020/2021 compared to what was proposed in
the draft budget, without increasing the debt to revenue ratio above the
proposed 290 per cent level.
8. However,
Watercare have now advised that $224 million of additional capital investment
and $15 million of operating expenditure will be required in 2020/2021 to
accelerate plans to increase water supply capacity from the Waikato river and
bring alternative water supply sources back into service.
9. Watercare
have committed to finding ways to mitigate $121 million out of the $239 million
group debt impact. The remaining group debt impact to be mitigated is $118
million. After applying the $40 million of budget capacity identified above,
the residual gap to be mitigated is $78 million.
10. The
recommended mitigations for this residual gap under each rates increase option
are set out in the following table:
|
Lever
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Proposed additional mitigations with average rates
increase of:
|
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3.5%
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2.5%
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Borrowings
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Increase debt to revenue
ratio to 291%
|
Increase debt to revenue
ratio to 292%
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Capital investment
deferrals
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Defer an additional $32.5
million of capital investment.
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No change.
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Operating expenditure
reductions
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No change.
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No change
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Asset recycling
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Increase target by a
further $20 million.
|
Increase target by a
further $20 million.
|
|
Ngā tūtohunga
Recommendation/s
There are no recommendations
for this report as the budget recommendations are set out in the Mayoral
Proposal report on this agenda.
|
Horopaki
Context
11. The starting
point for budgets for the Auckland Council group for 2020/2021 was year three
of the 10-year Budget 2018-2028, as updated and adjusted via the Annual Budget
2019/2020 and other subsequent budget decisions made by the Finance and
Performance Committee or the Governing Body.
12. From November
2019 to March 2020, the council worked through its normal approach to refining
and consulting on group budgets for 2020/2021 with only modest amounts of new
expenditure proposed.
13. On 16 April 2020, the Emergency Committee acknowledged that
given the COVID-19 pandemic context, there was no “business as
usual” budget scenario for next financial year. The committee therefore
agreed that staff prepare an Emergency Budget for public consultation on the
basis of:
· a “most
likely scenario” approach to budgeting, disclosing the impacts of uncertainty
· maintaining
essential and critical council activities, with advice provided on reducing
spending on discretionary activities
· identifying
impacts on local activities and the most vulnerable in our community
· identifying
impacts on Māori outcomes
· maintaining
capital investment to support economic activity
· maintaining
strong commitment to long-term financial prudence.
14. Because
financial scenario modelling indicated that there was no viable option to
operate within existing balanced budget and debt policy limits in 2020/2021,
the council resolved that it was prudent and necessary to temporarily depart
from these policies in the short-term.
15. The council
also agreed that Aucklanders would be asked if they support average general
rates increases of either 2.5 or 3.5 per cent, and agreed that the consultation
materials will identify the impacts of rates increases between 0 and 3.5 per
cent on council services and business activity in Auckland.
16. Consultation
materials were adopted by the Governing Body on 28 May 2020. Along with the
options and implications of different rates increases, these documents
explained the central budget issue of a revenue shortfall for 2020/2021 of the
order of $500 million, and set out in detail a range of proposed mitigating
actions. This included temporarily elevated debt levels, capital expenditure
deferrals, temporary reductions in operating service levels and asset
recycling.
17. Public consultation on the
proposed draft Emergency Budget opened on 29 May 2020 and closed on
19 June 2020. A series of workshops on
key budget issues and savings options were
held in the past month, where more information and
answers to queries from members of this committee were
provided to support final decisions.
Tātaritanga me ngā
tohutohu
Analysis and advice
18. In developing
a draft Emergency Budget for consultation, staff used the following criteria
and principles to guide thinking about the appropriate balance between the
levers and the extent of change for each lever. These criteria have not changed
and are still relevant considerations for deciding on the final budget for
2020/2021.
· ensuring
long-term financial prudence and sustainability - ensuring the council can
continue to access capital markets on favourable terms to finance the
investments required to progress its long-term objectives, and avoid placing an
unsustainable debt burden on future ratepayers
· honouring
contractual commitments – avoiding the cost and any other adverse
consequences of cancelling in-flight projects or long-term operational contracts.
The extent of change may require some contracts to be reviewed, varied or
renegotiated, but unilateral cancellation of contracts should generally be
avoided.
· protecting
public health and safety – ensuring changes do not result in
unacceptable risks to the health and safety of our community
· preserving
asset integrity – ensuring short-term changes do not lead to severe
and irreversible long-term declines in the condition of critical assets.
· statutory
obligations – ensuring we are able to continue to comply with key
legislative requirements for the provision of council services.
· Māori
outcomes – ensuring that we continue to honour our commitments to Māori
and that we continue to act in accordance with our statutory provisions
relating to Te Tiriti o Waitangi.
· jobs
and employment – minimising the impact of changes on jobs and
businesses in Auckland. While a material impact is now unavoidable, different
changes have different impacts on employment outcomes. Where possible,
preferences should be given to budget changes with the least impact on
employment outcomes for Auckland, regardless of whether or not the council
group is the employer.
· ease
of implementation - some changes can be implemented quickly and easily,
while others will be long, complex and less certain. Where possible, preference
should be given to the budget changes that are quick to implement and have less
implementation risk.
· protecting
the most vulnerable - some changes may have material impacts on the most
vulnerable people within our community. Such changes should be avoided or
minimised wherever possible.
· supporting
our communities – the council plays a key role in supporting a number
of community organisations. Some of these organisations are facing a greater
increase in community need while their other funding sources are at risk.
Wherever possible, changes should at least avoid making these community groups
any worse off.
· climate
change – different changes will have different implications for
climate change. Budget changes that slow or reverse our progress in this
critical area should be avoided wherever possible.
Key considerations for using the levers
19. Each of the
levers has different implications and constraints, and it is important to keep
these in mind when making final budget decisions. These are discussed in
this section.
Use of debt
20. Relying
solely on the use of debt would be a significant departure from the
council’s current strong commitment to long-term financial prudence. This
path could lead to higher borrowing costs, reduced access to debt markets and a
reduced ability to progress long-term strategic objectives while keeping costs
affordable for future ratepayers.
21. Higher debt
levels would mean that the additional debt needs to be repaid at some point in
the future. It would also mean a reduced ability for the council to
respond to any further risks or shocks. Earlier financial scenario modelling
indicated that adverse circumstances under a more pessimistic scenario about
the COVID-19 pandemic situation could increase the debt to revenue ratio by up
to 20 per cent in 2020/2021 compared to the projections based on a most likely
set of assumptions.
22. The council
therefore agreed that a key parameter for the draft budget would be a projected
debt to revenue ratio no higher than 290 per cent in 2020/2021, and that this
would return to within the debt policy limit of 270 per cent by 2021/2022.
These settings allow the council to be confident that the actual ratio will not
exceed 300% as things change over the course of the year, and provide the
council with the time necessary to consider further budget changes in-year
should it become necessary.
23. Staff
consider that these considerations remain valid for final budget
decision-making and recommend that the projected debt to revenue ratio for
2020/2021 remain at, or as close as possible to, 290 per cent.
Deferring capital investment
24. When
considering which capital projects should be deferred, priority was given to
investments already contractually committed, critical renewals and investments
necessary to meet statutory requirements.
25. For the
deferrals proposed in the draft budget, most existing contractual arrangements
would still be able to be honoured but there would be noticeable impacts on
service levels and the timeframes for achieving key council objectives. Some
major projects that are not yet committed would be delayed and there would
necessarily be less investment in renewal and safety programmes than previously
planned.
26. Further
capital deferrals over and above those proposed in the draft budget would
generally be challenging to achieve while honouring existing contractual
commitments and delivering critical renewals. Further deferrals may require
some contractual commitments to be broken entirely, leading to higher costs and
significant reputational damage in the construction market. Further deferrals
would also likely require further reductions to safety and renewal programmes.
This could have significant health and safety implications and would fail to meet
many of the criteria outlined above. Therefore, this is not
recommended.
27. In addition
to contractual issues and the near-term service level trade-offs associated
with reduced capex delivery, Auckland Transport have raised several longer-term
concerns including:
· a significant
reduction in Auckland Transport’s capacity to deliver projects, with
significant job losses, which will be slow and expensive to rebuild in the
future
· the
loss of construction industry capacity and capability in Auckland which will
take years to rebuild
· increased
roading maintenance costs in medium term as a result of deferred renewals
· slower
progress with achieving intended reductions in emissions and deaths and serious
injuries on Auckland’s roads.
28. The advice of
the council’s Chief Economist is that it is critically important to
continue to invest in quality capital projects at this time to stimulate the
Auckland Economy, both in terms of maintaining business confidence, and the
flow-on impact of this spending through the economy.
29. In his
professional opinion, the economic benefit that this would stimulate compared
to reducing the rates burden cannot be underestimated. A lower rates bill in
times of economic nervousness, will generally be banked to pay off debt. It
will play almost no role in stimulating more confidence or economic activity.
But spending that achieves the twin goals of supporting direct employment and
enabling significant further downstream employment should be supported wherever
feasible.
30. Staff
consider that all of these considerations remain valid for final budget
decision-making and recommend that as much capital investment as possible is
included in the final budget while maintaining the council’s commitment
to long-term financial prudence.
Operating expenditure reductions and temporary service
level changes
31. The draft
budget included substantial reductions to operating expenditure across the
council group. This included reductions in staff and other discretionary costs,
as well as some proposed temporary reductions in service levels.
32. The
biggest single movement in operating expenditure has been the $120 million of
savings for Auckland Council. This is a sizeable number with sizeable impacts
for both staff and our community. With savings of this magnitude, the Auckland
Council parent organisation will get smaller as it is not possible for
reductions to only touch back-office functions as opposed to having some impact
on frontline services.
33. Reducing
operating expenditure to completely match the cash revenue shortfall in
2020/2021 will not be possible, so debt funding will temporarily need to be
used to fund operating expenditure. This is not a prudent approach long-term
and so debt funding of operating costs in the short-term should be kept to a
minimum.
34. The
implications of service reductions depend greatly on the particular area of
spend. Many reductions will impact on jobs, either within council or across the
wider Auckland economy. The nature of many services provided by or on behalf of
the council are associated with lower paying jobs, so some service reductions
may have a disproportional effect on lower income households. In
addition, many grants and community services provided by the council help
support the communities in Auckland that are most in need so reduction in these
areas could have a significant impact on those communities.
35. The
consultation materials outlined some further reductions that might be required
to achieve a rates increase below 2.5 per cent. Further reductions of
that nature are not recommended as they would start to cut into key priority
areas such as Māori
outcomes, emissions reductions, living wage policy implementation, illegal
dumping and economic development activity to support recovery.
36. Staff
consider that these considerations remain valid for final budget
decision-making and recommend that the final budget only included operating
expenditure reductions that were proposed in the consultation materials.
Use of asset recycling
37. Asset
recycling is an important lever for the council as it can allow capital to be
invested in the most strategically important activities. This is an aspect that
both credit agencies and central government consider when assessing Auckland
Council’s financial position.
38. The
broader implications of asset recycling will vary according to the specific
opportunity. Simply transferring ownership of an asset will not generally
impact employment and business activity in the same way that reduced capital or
operating expenditure would. The impact on the community will vary, but often the
impact is a potential lost opportunity to possibly use that asset for some
unspecified alternative use in the future
39. The
draft budget proposed a $200 million increase in the budget target for asset
recycling in 2020/2021 to reduce the debt requirement and allow more planned
capital investment to occur in that year than would otherwise be the case.
However, this will require a streamlined approach to approving property
disposals. These matters are the subject of a separate report on this agenda.
40. Staff
consider that these considerations remain valid for final budget
decision-making and recommend that the final budget include an increased target
for asset recycling of at least $200 million.
Details of proposed budget changes
41. Following
consideration of all the issues discussed above, the council agreed to include
the following key budget parameters in the draft Emergency Budget 2020/2021 for
consultation:
· a projected cash
revenue shortfall of $525 million
· $120 million of
savings and cost reductions for the council parent and $38 million for the
Council Controlled Organisations (CCOs)
· a temporary elevated
debt to revenue ratio of 290 per cent for one year, with this ratio returning
to within the 270 per cent debt to revenue policy limit from 2021/2022
· proposed further
operating cost reductions and temporary service level changes of $54 million
under the 3.5 per cent general rates increase option and $75 million under the
2.5 per cent option
· proposed
further capital investment deferrals of $280 million under the 3.5 per cent
option and $345 million under the 2.5 per cent option
· a proposed $200
million increase in the asset recycling target for 2020/2021.
42. The following
table sets out the proposed key budget impacts for each activity that were
included in the consultation material under each rates increase option.
|
Activity area
|
Key budget impacts with average general rates increase
of:
|
|
3.5%
|
2.5%
|
|
Transport
|
· $700m
capital envelope – impact climate, safety & renewals
· $20m
reduction in PT services ($10m net reduction)
· $9m of
additional infringement and other revenues
· $5m of
additional cost savings
|
· Capital
envelope reduced to $660m
· $4m of
revenue from the removal of concessions (e.g. students, seniors)
· $900,000
from charging for Park & Rides
|
|
Water, wastewater and
stormwater
|
· $57m capital
deferral by Watercare, primarily growth focused
· Healthy
Waters capital deferrals of $39m – continuing projects committed, prioritising
network risk and public safety, deferring most other projects
· Healthy
Waters opex – less preventive maintenance, more in-housing
|
· No
further reductions
|
|
Parks and community
|
· $162m of
planned capital investment deferred - including fewer land acquisitions,
deferrals of OLIs and unallocated LDI, deferral of 80-90% of planned renewals
· Reduced
facility opening hours and programming
· Reduced
community grants – e.g. deferral of Sports and Recreation Fund
· $3m
reduction in LDI
|
· Further
$10m reduction in capital investment
· Temporary
reduction in maintenance of open spaces and regional grants
· Some
community facilities with low utilisation may be permanently closed
· Further
$3m reduction in LDI
|
|
City centre and local
development
|
· Deferral of
Otahuhu Town Centre and Hurstmere Rd projects
· Reduction of
Panuku capital programme to $100m
· Reduction in
operating spend including project planning and placemaking and activation
|
· Panuku
capital programme reduces to $90m
|
|
Activity area
|
Key budget impacts with average general rates increase
of:
|
|
3.5%
|
2.5%
|
|
Economic and cultural
development
|
· Deferral of
non-urgent renewals of stadiums and Maritime Museum
· Deferral of
security infrastructure and emissions reduction investment
· Reduction in
Auckland Live public programme and Art Gallery exhibitions
· RFA
operating efficiencies and salary reductions
|
· $5m
critical renewals would be delayed
|
|
Environmental
management & regulation
|
· Reductions
in pest eradication
· Temporary
reductions of kauri dieback enforcement
· Less grants
for community-led programmes
· Consolidation
of existing animal shelters
· Optimisation
and automation of consenting processes - $5m saving
|
· No
further reductions
|
|
Council support
|
· $5m target
for removing duplication across the council group
· Voluntary
salary reductions across the group
· Operating
model changes – smaller workforce
· Reduced
spending for IMSB and Mayoral Office
· Reduction in
budgets for travel, training, professional services etc.
|
· No
further reductions
|
Public
feedback
43. The results
of public feedback on the draft Emergency Budget were presented to a workshop
of this committee on 7 July 2020 and are attached to a separate report on this
agenda.
Rates increases
44. A total of
33,600 responses were received on the topic of the average general rates
increase for 2020/2021. Of these, 29 per cent of responses supported a 2.5 per
cent increase, 28 per cent supported a 3.5 per cent increase, 13 per cent
selected ‘I don’t know’, and 30 per cent provided a different
response or a comment. A majority of the responses in the latter two categories
indicated a preference for a rates freeze or decrease.
45. When
excluding pro forma feedback received on this topic, 40 per cent of responses
supported a 2.5 per cent general rates increase, 37 per cent supported a 3.5
per cent general rates increase, 10 per cent selected ‘I don’t
know’, and 13 per cent of responses provided a different response or a
comment without selecting a survey response option.
46. Those who
supported a 3.5 per cent increase expressed a desire for council services to
remain open and investment in infrastructure and climate change initiatives to
continue. However, those who supported a 2.5 per cent increase were concerned
about financial hardship caused by the COVID-19 situation and whether
increasing rates would add to this.
47. Of 34
regional stakeholder organisation providing feedback on this topic, 15
supported a rates increase of 3.5 per cent or higher. They commented that this
level of increase would help retain council services such as libraries,
swimming pools, community halls, parks, arts and culture programming and
community events. The higher rates option was also seen as helping to stimulate
the economy and keep people in jobs. There were 8 regional stakeholder
submissions supporting a 2.5 per cent rates increase or rates freeze due to
concerns about ratepayers facing increased financial hardship under the new
economic environment.
48. An opinion
survey of 4000 Aucklanders by Colmar Brunton found that 51 per cent of
respondents preferred a 2.5 per cent, 38 per cent preferred 3.5 per cent, and
11 per cent did not know.
Spending priorities
49. Many
submissions expressed concern over specific areas of proposed spending
reductions. The summary of feedback report includes some sentiment
analysis which aimed to capture the key themes from the large volume of
feedback received.
50. This
sentiment analysis indicated that if additional funding could be made
available, the strongest preference for spending that funding would be in the
areas of road safety and climate change. Other high priority spending areas
identified included congestion, public transport, cycleways, parks, libraries,
community grants and water supply. There was also a large number of pro-forma
submissions advocating for the Glenvar Road project to be urgently progressed.
51. There was
moderately positive support for events generally, but strong opposition to
spending on the America’s Cup. Specific budget proposals set out on the
consultation with high levels of public opposition included the consolidation
of animal shelters, charging for park and rides and reduced provision of public
toilets.
52. Submissions
from regional stakeholders generally expressed concern about the impact of
spending reductions on public transport, library and community services,
employment, climate change and environmental outcomes and on vulnerable
communities.
Use of debt
53. Analysis of
submissions found that 231 submissions that were supportive of making greater
use of debt to minimise spending reductions and 243 submissions were
opposed. Those in support frequently commented that the council should
follow central government’s example of increasing borrowing to help
support economic recovery, especially given low interest rates. Those opposed
typically expressed concern about high debt levels leading to higher costs and
higher rates increases in the future.
Use of asset recycling
54. Analysis
of submissions found that 175 submissions that were supportive of making
greater use of asset recycling and 186 submissions were opposed. There were
also 20 submissions that opposed the disposal of a particular property listed
in the consultation materials.
55. The use of
asset recycling as a funding lever for the Emergency Budget is the subject of a
separate report on this agenda.
Updated budget position
56. Since the
draft budget was adopted, finance staff have reviewed and updated group budget
projections for 2020/2021 based on the latest information. A key part of this
process was to work with our Chief Economist to update our underlying
assumptions following the early move to alert level one, and then to work with
CCOs and council departments to update budget projections in light of those
revised assumptions.
57. Overall, this
budget review has identified $40 million of additional short-term budget
capacity. This is primarily the result of a more favourable revenue outlook for
2020/2021 due to revised assumptions about social distancing requirements and a
slightly improved economic outlook. This was been partly offset by higher than
anticipated actual capital expenditure delivery in the year to 30 June 2020 and
other cashflow movements.
58. An
overview of these budget updates is set out in Attachment A.
59. Updated
details of the $120 million list of parent operational savings is set out in
Attachment B and revised information on the further operating expenditure
savings to achieve the 3.5 per cent and 2.5 per cent rates increase is set out
in Attachment C.
60. Updated
capital investment information is set out in Attachment D. This includes a
group capital project list based on a 3.5 per cent rates increase option,
details of projects deferred from 2020/2021 and details of the further
deferrals that would occur under the 2.5 per cent rates increase option.
61. An overview
of the updated group budgets under each rates increase option is set out in
Attachment E.
62. All the
budget information set out in these attachments excludes any adjustments for
Watercare’s drought response and potential mitigations. Group
budgets for 2020/2021 will be updated once the issues discussed in the
following sections, and any other budget matters that may arise, are resolved.
Watercare’s drought response
63. The draft
Emergency Budget signalled that $50 million to $180 million of additional
capital expenditure may be required in 2020/2021 to augment Auckland’s
supply of drinking water in response to the drought situation.
64. Since the
start of this calendar year, the Auckland region has received significantly
less rainfall than normal. On 15th April 2020, the total volume of water stored
in Auckland’s water supply dams dropped below 50 per cent for the first
time in more than 25 years. Recent rainfall has seen total storage edge up above
55 per cent, well below where it should be at around 80 per cent for this time
of year.
65. If the
drought continues and Auckland’s water storage does not build adequately
over summer, then more severe water restrictions may be required which are estimated
to potentially impact on a substantial number of jobs in Auckland.
66. Auckland
Council and Watercare have been working together to understand and mitigate the
challenges faced by Auckland as a result of the current drought situation. This
has included working constructively with external parties in the Waikato region
to access more water from the Waikato river.
67. Watercare
have now advised that $224 million of additional capital investment and $15
million of operating expenditure will be required in 2020/2021 to accelerate
plans to increase water supply capacity from the Waikato river and bring
alternative water supply sources back into service.
68. Watercare
have committed to finding ways to mitigate $121 million out of the $239 million
group debt impact created by the need for this additional expenditure.
This will be achieved through mitigations such as pricing, asset disposal
and/or the deferral of non-critical capital investment.
69. The remaining
group debt impact to be mitigated is $118 million. After applying the $40
million of budget capacity identified above, the residual gap to be mitigated
is $78 million.
Options for the final budget
70. There are two
key decisions for the council to make in order to finalise budgets for
2020/2021. The first is to agree whether to choose the 3.5 or 2.5 average
general rates increase option with the impacts set out in this report and its
attachments. The second choice is how to mitigate the $78 million residual gap
discussed above.
71. The decision
on rates increases is a political decision that the council will have to make
after considering all relevant factors including public feedback, the latest
budget information and the overall wellbeing of current and future Aucklanders.
Staff consider that the community is best served by higher levels of investment
and service delivery and that the best way to support ratepayers experiencing
financial difficulties in the tough economic times ahead is through targeted
assistance such as rates postponement and deferment.
72. The following
table sets out an assessment of the two rates increase options against the
criteria and principles outlined above. These are largely unchanged from the
draft stage.
|
Principle
/ criteria
|
Key considerations with average rates increase of:
|
|
3.5%
|
2.5%
|
|
Ensuring long-term
financial prudence and sustainability
|
While temporarily
exceeding debt limits, budget settings are prudent and signal a strong
commitment to long-term sustainability.
|
The additional mitigations
in this budget scenario ensure long-term financial prudence is
maintained.
|
|
Honouring contractual
commitments
|
Most contracts would be
honoured, with some delays and variations negotiated.
|
Most contracts would be
honoured, with some delays and variations negotiated.
|
|
Protecting public
health and safety
|
Spending reductions compared
to previous plans will result in less progress with improving public health
and safety.
|
Further spending
reductions will further impact intended public health and safety outcomes.
|
|
Preserving asset
integrity
|
The need to prioritise
some renewal and maintenance budgets will increase asset risks.
|
Further prioritisation
will increase asset risks further and likely lead to higher costs over the
medium term.
|
|
Statutory obligations
|
Statutory obligations able
to be complied with.
|
Statutory obligations able
to be complied with.
|
|
Māori outcomes
|
Māori outcomes able
to be progressed as a key priority area.
|
Māori outcomes able
to be progressed as a key priority area.
|
|
Principle / criteria
|
Key considerations with average rates increase of:
|
|
3.5%
|
2.5%
|
|
Jobs and employment
|
Lower capital and
operational spending compared to previous plans will result in lower levels
of employment within the council group and across the wider Auckland economy.
|
Further spending
reductions will lead to further reductions in jobs and employment.
|
|
Ease of implementation
|
Significant organisation
change will be required, and savings targets will not be easy to achieve.
|
The challenges will become
more difficult and implementation risk will increase.
|
|
Protecting the most
vulnerable
|
Reduced employment levels
will mean more people in need. Some temporary reductions in grants, community
services and LDI funding may impact our most vulnerable communities in a time
of greater need. Funding will need to be carefully prioritised to address the
most critical needs.
|
Further reductions in
grants and LDI funding may further impact vulnerable communities.
|
|
Supporting our
communities
|
Reduced staffing levels
and reductions in some grants, community services and LDI funding will
temporarily reduce our ability to support our local communities compared to
current plans.
|
Further reductions in
grants and LDI will further reduce our ability to support our local
communities. Some community facilities with low utilisation may need to close
permanently.
|
|
Climate change
|
Reductions in
discretionary budgets including staff and professional services may impact
the council’s ability to progress climate change response actions from
BAU budgets.
|
Temporary reductions in
some public transport services, temporary reductions in concessionary fares
and delayed investment in walking and cycling infrastructure are likely to
adversely affect Auckland’s carbon emissions in the near-term.
|
73. Aside
from considering the level of the rates increase, the levers available to
mitigate the remaining $78 million residual impact are those outlined above:
use of debt, capital expenditure deferrals, operating expenditure reductions
and asset recycling.
74. As discussed
above, staff consider that the debt to revenue projection for the final budget
should be maintained at, or as close as possible to, 290 per cent. Each one per
cent increase in this setting will increase the council’s financial risk
and reduce its ability to respond to any future risks or shocks.
75. If the
council agreed to the 3.5 per cent rates increase option, then some of the
capital deferral and/or operating expenditure reductions proposed under the 2.5
per option would still be available to help mitigate the remaining shortfall.
While this would not be entirely consistent with the budget proposals set out
in the consultation materials, staff consider that this could be an appropriate
part of the council’s response to the emerging drought
situation.
76. Because
Watercare’s drought response is primarily capital in nature, and because
capital timing changes generally have a larger impact on debt than operating
expenditure reductions, staff recommend that $32.5 million of the capital
expenditure deferrals from the 2.5 per cent rates increase options be
considered to help mitigate the residual gap if the 3.5 per cent rates increase
option is chosen. This represents half of the $65 million proposed additional
deferrals set out in the draft budget. If agreed, staff recommend that each of
the proposed deferrals under the 2.5 per cent option be reduced by 50 per cent
to avoid a severe impact on any one area of spend.
77. The
consultation materials for the draft budget outlined how the proposed $200
million increase in the asset recycling target would be achieved from a set of
opportunities that could be as high as $350 million. Staff recommend that under
either rates increase option that this target be increased by a further $20
million, taking the total target for 2020/2021 from $24 million in the
pre-COVID budget to $244 million. While a higher target will be slightly harder
to achieve, the large opportunity set suggest that it should be
feasible.
78. The
recommended mitigations under each rates increase option are set out in the
following table:
|
Lever
|
Proposed additional mitigations with average rates
increase of:
|
|
3.5%
|
2.5%
|
|
Borrowings
|
Increase debt to revenue
ratio to 291%
|
Increase debt to revenue
ratio to 292%
|
|
Capital investment
deferrals
|
Defer an additional $32.5
million of capital investment.
|
No change.
|
|
Operating expenditure
reductions
|
No change.
|
No change
|
|
Asset recycling
|
Increase target by a
further $20 million.
|
Increase target by a
further $20 million.
|
Tauākī whakaaweawe
āhuarangi
Climate impact statement
79. The
key climate impacts of budget changes under the different rates increase
scenarios are set out in the impact table above.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
80. The
proposed budgets set out in this report and its attachments are based on budget
information submitted by organisations from across the council group. Each of
the CCOs engaged with their board of directors on their budget submissions.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
81. The
key impacts of budget changes on local communities under the different rates
increase scenarios are set out in the impact table above.
82. Public
feedback on the draft Emergency Budget has been analysed by local board area
and reported to this committee and to each Local Board.
83. Local Boards
have been invited to provide their specific views on the Emergency Budget to
this committee. Those views will be presented in a workshop on 14 July 2020 and
are set out in a separate report on this agenda.
84. Part of the
process for finalising the annual budget (including 21 local board agreements)
includes local boards agreeing local activity budget changes and their work
programmes for 2020/2021.
Tauākī whakaaweawe
Māori
Māori impact statement
85. We
understand that Māori are particularly
vulnerable to the impacts of COVID-19. Opportunities are being considered to
repurpose existing Māori Outcomes budget to support Māori-led
responses to and recovery from COVID-19.
86. The key
impacts of budget changes on local communities under the different rates
increase scenarios are set out in the impact table above.
Ngā ritenga
ā-pūtea
Financial implications
87. Financial
implications are discussed in the body of this report, with further details set
out in the attachments.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
88. The
high-level financial risks of the COVID-19 situation for the council group are
discussed in the body of this report and its attachments.
89. The Audit and
Risk Committee plays a key role in maintaining oversight and advising the
Governing Body on the management of significant financial risks and the
associated compliance matters, including whether or not a robust process has
been followed.
90. Staff
reported to the Audit and Risk Committee on 14 April on the process,
methodology and underlying assumptions used to assess the financial
implications of the COVID-19 situation on the council group. The
committee’s oversight role of these key matters is ongoing, with the last
update provided to the committee on 26 May 2020 and the next update scheduled
for 24 August 2020.
Ngā koringa ā-muri
Next steps
91. Decisions
to adopt the final budget and set rates will need to be made by the Governing
Body as these matters cannot be delegated to a committee. This is scheduled to
occur on 30 July 2020.
92. Staff
are also continuing to progress discussions with credit rating
agencies and continuing to engage with central government officials on
statutory compliance matters and opportunities for greater collaboration on capital investment in Auckland post-disruption.
Ngā tāpirihanga
Attachments
|
No.
|
Title
|
Page
|
|
a⇩
|
Overview of budget updates
|
161
|
|
b⇩
|
$120 million savings list
|
167
|
|
c⇩
|
Savings and temporary service level reductions
|
173
|
|
d⇩
|
Group capital investment programme
|
185
|
|
e⇩
|
Group budget overview
|
199
|
Ngā kaihaina
Signatories
|
Author
|
Ross Tucker - General Manager, Financial Strategy and
Planning
|
|
Authoriser
|
Kevin Ramsay - Acting Group Chief Financial Officer
|
