June 1 2020 INL Digital Edition

JUNE 1, 2020
Tough decisions as revenue
drops but spending rises
Phil Goff
On May 29, 2020, Auckland
Council opened
public consultation on
its Emergency Budget,
which responds to the financial
crisis caused by Covid-19.
Covid-19 has had a dramatic
impact on the world, including
our Nation and City.
While strong management
of the infection has saved lives
in our country, the lockdown
and the international recession
caused by coronavirus is severely
impacting our job market and
the revenue Auckland Council
needs to provide services for
Aucklanders and invest in our
city.
Serious revenue shortage
We estimate that the fall in
revenue will be more than half
a billion dollars in the coming
financial year. The dividends
from council-owned shares in
assets like Auckland Airport
have been slashed; revenue from
our venues, pools and facilities
such as a the zoo and Museum
of Transport and Technology
was reduced to nothing during
lockdown, and huge losses have
been sustained from the loss
of public transport fares and
parking.
With the slowdown in the
economy, Council revenue
will also suffer from reduced
development contributions and
council regulatory functions.
On top of this, we have budgeted
$65 million to help people
who need rates postponements
because they are suffering financial
hardship due to COVID-19.
Services at risk
The loss of revenue, the largest
in our City’s history, puts at risk
the services that the Council
provides to Aucklanders, and our
ability to invest in much-needed
infrastructure for transport,
housing and the environment.
With loss of revenue, we also
need to reduce our spending.
The law requires that we
balance our budget, although
there is flexibility to do this over
a couple of years rather than in
one budget.
We are, however, conscious
of our responsibility to manage
our finances prudently and not
just increase debt that could
jeopardise our credit rating, raise
the cost of borrowing and put
a much larger debt on future
generations.
Debt should be constrained to
finance infrastructure and not to
cover operational expenses.
Major changes coming
This means we will have to
make tough decisions. Services
that are less important will need
to be reduced and some investment
in infrastructure will need
to be deferred. Staff salaries will
be affected, and the council will
have to reduce staff numbers.
Over the last three years, the
Council has made efficiency and
value for money savings.
However, in the post-Covid
environment, further, and larger,
cuts in spending are necessary
and will inevitably reduce
what Auckland Council and its
organisations are able to do.
In all of this, we are working
hard to ensure that important
services needed and valued
by Aucklanders continue to be
delivered.
We are also striving to retain
as high a level of investment in
infrastructure as we are able.
Aucklanders need this investment
to tackle long-standing
problems such as housing
shortages, traffic congestion and
to improve the quality of our
environment.
The investment is also
important to create jobs at a time
of growing unemployment and
to stimulate economic recovery.
Future is bright
The challenge we face is great.
However, we are determined to
continue our progress towards
a better and more inclusive
community and to deal with
long-term problems such as
climate change.
During the health crisis caused
by Covid-19, we showed what
this City and our country could
achieve by working together.
Just as we were successful in
breaking the chain of Covid-19
transmission during the lockdown,
by working together we
can recover from the recession
and achieve a stronger and
better Auckland.
Please visit Akhaveyoursay.
nz/emergency-budget to find
out more about the Emergency
Budget and to share your
feedback.
Phil Goff is Mayor of Auckland.
He writes a regular column in
Indian Newslink.
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