Auckland Council cuts jobs, defers projects

By Matthew Theunissen of RNZ

Aucklanders will have to pay more in rates, but will get less, as the council tries to fill a $750 million hole in its budget.

Councillors on Thursday voted in favour of increasing rates by 3.5 percent and to "slash" - as Mayor Phil Goff put it - council spending, while also selling off tens of millions of dollars worth of council assets.

Council staff are anxiously waiting to hear who will be among the 500 to lose their jobs in addition to the 600 temporary and contract workers who've already gone.

The COVID-19 pandemic hit the council's coffers hard, resulting in a half-billion-dollar hole.

And as councillor Desley Simpson prepared perhaps the most difficult budget in the city's history, Watercare came cap in hand asking for another quarter billion to address the ongoing drought.

So what was her reaction?

"I don't think it would be appropriate for me ... I'm trying to think of the right words," she said.

"It was a huge shock, you know, but more importantly we needed the supply. I was really grateful to the mayor [because] he got us the supply, but I wasn't so grateful when I saw the price tag that went with it."

Most Aucklanders will now pay somewhere between $110 and $130 more in rates, while council spending will be cut by over $200 million.

That means shopping centres and reserves looking shabbier and dirtier with less cleaning and maintenance.

"It may be that as a result of COVID-19 and the efficiencies and the financial challenge we have, that the grass just becomes a little bit longer before it's mowed again," Simpson said.

Most capital works will be delayed.

"We're deferring a huge amount of money. We're deferring ... hundreds of millions of dollars of projects. We're trying to concentrate on only delivering what we really need to do. And that's important."

Goff said the council acted in a financially prudent way while keeping key services intact and continuing to invest in infrastructure projects to help the economic recovery.

"We also had to look at trimming our spending. Trimming is a euphemism - we had to slash our spending in some areas," he said.

"We've cut council spending by over $200 million for the coming year, we have had to lose staff - 600 contingency workers already are no longer with us and notice is to be given to the equivalent of 500 full-time jobs on council."

Greg Sayers was one of just three councillors to vote against the budget.

"The main reason was I thought that raising taxes such as rates in a recession makes a recession even deeper and that's just not the right thing to be doing for Aucklanders at this very time," he said.

Public Services Association national secretary Glenn Barclay said the council should be trying harder to keep jobs.

He argued it should have spread repayment of its debts over several budgets.

"For anyone who loses their job at this point it's very, very tough. But also you should look at it from the point of view of what it means for the local economy - that's 500 people who will not be paying taxes, who will not be spending at the same rate in the local economy," he said.

"You don't make severe cuts in the middle of a recession."

However, Barclay welcomed the 3.5 percent rates rise as it avoided "catastrophic" cuts to public transport, road safety and facilities for children and the elderly.

Goff said his heart went out to the 1100 staff and contractors who were losing their jobs, but it was not possible to keep spending as if the half-billion shortfall loss never happened.

The council was borrowing beyond its debt-to-revenue ratio for the next year, but could not continue borrowing for operating costs long term, as it risked lowering the council credit rating and eventual higher interest rate payments.

Goff told Morning Report a rates freeze would have meant closing down infrastructure projects crucial in dealing with Auckland's transport, housing and environmental problems.

"The best time to build an infrastructure project is when you've got a recession, and that means you can contribute to getting out of a recession."