Auckland Mayor Wayne Brown has ruled out rate hikes of 12%, although he claimed Auckland Council needed to find $270m to plug a growing budget hole.
In a statement on Monday morning, Brown said the Auckland Board of Trustees needed to “quickly” find $270 million to cover its growing budget hole for the 2023/2024 financial year.
However, he ruled out a 12% rate increase as a way to do so.
“Twelve percent rate hikes are not acceptable and will not happen,” Brown said.
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Instead, he said, the $270 million should be found through “corporate savings, operational efficiencies, careful scrutiny of CCO spend and business performance.” [council controlled organisations] and the port” – and “limited tariff increases”.
Brown blamed the $1 million budget hole on former mayor Phil Goff, who he said “hide the budget cracks” and “flip the buck to the new Board of Trustees.”
The $270 million budget hole does not include expected cost blowouts from the Central Rail Link project, estimates which Central Rail Link Ltd had refused to provide to its three shareholders, Finance Minister Grant Robertson, Transport Minister Michael Wood and Auckland Council, Brown said.
The Auckland Council Board will meet on Thursday to discuss the Council Group’s current financial projections, as part of the council’s annual budget process.
Auckland Council Group Chief Financial Officer Peter Gudsel acknowledged that the council was feeling the continued impact of rising inflation and interest rates, which was causing costs to rise faster than revenues.
“In our published 2022/2023 annual budget, the board estimated an ongoing operating gap of between $90 million and $150 million per year.
“However, as inflation and interest rates have risen higher and faster than economic forecasters anticipated at the time, our latest estimate of the full impact of the current operating budget for 2023 /2024 is about $270 million,” Gudsel said.
Auckland Council chief executive Jim Stabback added that while the council ‘cannot predict the outcome of the annual budget decision-making’, it ‘will provide advice to staff and work closely with the Council boards, local councils and CCOs throughout this process”.
Final budget decisions will be made following public consultation early next year and before the adoption of the final annual budget by June 30, 2023.