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MOVED by Mayor W Brown, seconded by Deputy Mayor D
Simpson:
That
the Governing Body:
a)
agree to amend its
current long term plan (the 1-year Budget 2024-2034) to provide for a full
sell-down of the council’s shareholding in Auckland Airport Limited and
adopt the long-term plan amendment set out in Attachment B.
a)
agree to a mix of budget
levers for the Annual Budget 2023/2024 to achieve a balanced budget and
address the estimated $325 million operating budget gap for 2023/2024 and $40
million of storm-related additional operating costs, which includes:
Sale
of Auckland International Airport Limited Shares and Community Investment
i)
agreeing to adopt the
audited long-term plan amendment as tabled and agreeing to a partial
sell-down of around 8 per cent a partial sell-down of around 8 per cent
of the council’s 18.09% shareholding (that is 117,779,508 of
council’s current shareholding of 266,328,912 shares) in Auckland
International Airport Limited to pay down debt as provided for in the amended
long-term plan, to save an estimated net $28 million in 2023/24 and $131
million over the remaining term of the 2021-2031 long-term plan;
ii)
an intention to commit
funding of up to $200 million in the long-term plan 2024-2034 for fixing and
finishing community infrastructure and accelerating the achievement of local
board funding equity:
iii)
funding in 2023/2024 to
start Manurewa’s War Memorial Park upgrade and Avondale’s Te Hono
project;
Operating spending
reductions
ii)
additional operating
savings of $2433 million for Auckland Council including:
A)
$7.87.9 million of reductions for
regional services
B)
$1 million of estimated savings from
withdrawing from the direct provision of early childhood education services
as a regional service, acknowledging strong local support for some of
council’s current Kauri Kids centres and allowing for those centres to
continue to operate as local services sitting with local boards, in
discussion with relevant local boards and communities
C)
$3 million from changes to fees and charges
D)
$12 million of reductions under existing
delegations to the Chief Executive
E)
$4 million of reductions to local board
funding
F)
$5 million of unallocated savings to the
Chief Executive
iii)
$15 million of additional
operating savings for Auckland Transport, plus $7.5 million identified as
part of the work programme of the Expenditure Control and Procurement
Committee
iv)
$17.5 million of
additional operating savings for Tataki Auckland Unlimited, representing
total operating savings of $34.5 million for Tataki Auckland Unlimited once
existing savings targets against the long-term plan are taken into account
v)
$5 million of additional
operating savings for Eke Panuku
vi)
$5 million of additional
savings for the council group to be identified from further review of
revenue, capital and operating budgets as part of the work programme of the
Expenditure Control and Procurement Committee
Rates
vii) an average general rates increase of 9.811%
for 2023/2024, with the following rating policy adjustments that will result
in an overall 6.77.7% rates increase for the average value residential
property:
A)
pausing the Long-term Differential Strategy
for one year and extending the time by which the target share of 25.8 per
cent of rates to be raised from business properties is achieved to 2038/2039
B)
temporarily reducing the Natural Environment
Targeted Rate by 48.8% and Water Quality Targeted rate by 77.7% for one year
and utilising the money we have already collected from these targeted rates
to continue to deliver these work programmes as planned in 2023/2024
Debt
viii) pay down net debt of $1b from selling the
8.09% of AIAL shares which will reduce council’s debt to revenue ratio
to approximately 230%, down from the current projections of 248%
ix)
$80 million of additional
debt funding of the capital programme which will free up rates funding for
operating purposes, and $20 million of additional borrowing to fund one-off
storm-related operating costs
Ports of Auckland
x)
$10 million improvement in
Ports of Auckland’s net operating performance and dividend projections
b)
agree to the following
other budget adjustments for 2023/2024:
i)
$20 million of additional
operating expenditure per year for a storm response fund to improve our ability
to prepare for and respond to future storm events, including additional
stormwater maintenance and increasing local capabilities
ii)
$14 million of additional
operating expenditure for the recovery office and its work programme for
2023/2024
iii)
$6 million of additional
operating for urgent one-off storm response maintenance
iv)
$20 million of operating
expenditure for the Public Transport Turnaround Plan to get bus services back
on track and get Auckland moving
v)
$1 million more operating
expenditure for crime prevention to make our streets and town centres safer
for our communities
vi)
$450,000 more operating
expenditure for Surf Lifesaving Northern Region in 2023/2024 to increase
patrol hours and introduce new services on unpatrolled beaches to keep our
people safe
vii) $765,000 of operating funding for Coastguard
New Zealand to support the provision of services in the Auckland region for
2023/2024, to be funded from an existing budget allowance
viii) reprioritisation of existing 2023/2024 capex
budgets to accommodate $205 million to renew or replace critical park,
community, healthy waters and transport assets that were damaged by the storm
events.
ix)
$313 million of additional
capex for Watercare for 2023/2024 to deliver programmes in line with their
Asset Management Plan 2021 – 2041, incorporate externally funded
shovel-ready projects and to deliver additional storm related capex, noting
that this will not add to the operating budget hole as Watercare funds its
activities separately through water and wastewater charges, although it will
increase overall group debt.
c)
agree that the final group
budgets for 2023/2024 will be based on the projections set out in the staff
reports, adjusted for the budget decisions agreed as part of this item.
d)
agree to change the
council’s Revenue and Financing Policy to enable the Long-term
Differential Strategy to be paused for one year and extend the time at which
the target share of 25.8 per cent of rates to be raised from business
properties is achieved to 2038/2039.
e)
agree to establish a Political
Working Group on Auckland Council Investments to oversee a program of work to
consider, and make recommendations to the Governing Body on, the following
matters to inform the next draft long-term plan (the proposed 10-year Budget
2024-2034):
i)
council's ownership
objectives for its remaining shareholding in AIAL (which includes how council
could or should exercise its power as a minority shareholder);
ii)
the long-term use of the
funds realised from the sale of shares in AIAL, including considering which
of the following options best improves the council’s long-term
financial position:
A)
permanently reduce the
council’s long-term debt-to-revenue limit to reflect the reduction of
debt from the sale of Auckland International Airport Limited shares; or
B)
long-term investment in
other funds or assets.
iii)
any other steps that
should be taken to improve council’s approach in relation to its
investments or non-service assets that could maximize their contribution to
Auckland and to the council’s long-term financial position, so it can
provide for infrastructure and services expected by Aucklanders.
f)
agree to consider the
following approach to preparing the next 10-Year Budget 2024-2034 for
consultation and addressing the council’s persistent budget challenges:
i)
reduce the
council’s long term debt to revenue policy limit to reflect the
reduction of debt from the sale of Auckland International Airport Limited
shares, as part of the financial strategy included in long-term plan
2024-2034;
ii)
commit funding of
up to $200 million in the long-term plan 2024-2034 for fixing and finishing
community infrastructure, and allocate necessary operational expenditure to
accelerate the achievement of local board funding equity;
i)
develop Group Financial
Responsibility and Transparency Rules as part of the financial strategy
included in long-term plan 2024-2034, which will set standards in relation to
budget responsibility, political oversight and capital expenditure;
ii)
in relation to the Citizens Advice Bureaux of Auckland, funding
is provided subject to:
A)
implementation of a
Cash Reserves Management Plan to achieve compliance with the six-month
reserves policy by the end of 2023 (six months);
A)
ongoing quarterly
performance reporting, including number of Aucklanders served by CABx and
types of services utilised;
B)
proactively work with
council to seek sustainable central government funding with the aim of 50%
being derived from central government sources by FY 2024/2025;
C)
proactively work with
council to determine future service delivery model that aligns with
council’s Long-term Plan 2024-2034 direction.
iii)
the approach to 10-Year
Budget 2024-2034 will involve enhanced political participation and oversight
to develop council’s priorities, enabling full consideration of options
for revenue, expenditure, and assets, and providing for independent and
contestable facilitation and advice
iv)
political governance and
oversight groups will be used to consider key matters for development of the
10 Year Budget 2024-2034, including:
A)
sustainable funding for
cultural and social services and amenities, where there is a need to develop
clearer direction on the council’s priorities and modernise funding
models in partnership with government;
B)
funding for infrastructure
and growth, including the approach to development contributions and targeted
rates.
C)
opportunities to increase
non-rates revenue from council activities and assets
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