Significant Opportunities In Auckland Council Alternative Financing Reports

Auckland Council rates could be reduced, new community centres and local transport projects funded and key strategic assets retained if the next steps in the alternative financing reports are progressed says Auckland Council Mayor candidate Mark Thomas.

The Cameron Partners and EY reports on Alternative Sources of Financing were commissioned by council earlier in the year as part of the 10-year budget decision making.

“It took the Mayor five years to agree to this, but facing a 9.9% average rates increase he was forced to do what any normal public business would have done and take a careful look at the balance sheet.

Thomas said retaining control of Auckland’s strategic assets was important to many Aucklanders, but the reports raised the question of what that really meant in the context of $330 million of financial assets, $770 million of council land owned for no specific purpose, and 13 golf courses.

Thomas said council needed to be clearer what “strategic” means and both reports helped with this.

“Almost all of the EY reports 18 opportunities should be further investigated. Many Aucklanders will be concerned at the prospect of reducing council’s airport shareholding from the $1.3 billion it is currently valued at. But even if the current 22% holding was reduced to 10%, this would save Auckland ratepayers around $150 million in debt interest savings even adjusting for the dividend reduction.

The Port of Tauranga has been New Zealand’s most successful port with the Bay of Plenty Regional Council retaining a 54% majority ownership. Under an EY proposal where council retains the land, but provides a long-term lease of a regulatory controlled operator to run the port, Auckland ratepayers could have $414 million additional to invest in other local priorities.

Thomas said options to consider Watercare’s structure and AECT are more complicated and would require central government consent. He did not see them as key priorities for now.

“The report correctly draws attention to the fact that ratepayers will generally be unaware of the effective level of subsidy being provided by ratepayers for the community assets council provides.”

“Yet Auckland Council has already sold $112M in assets with little public comment. The key issue is getting a better understanding of why Auckland ratepayers need to own an asset, and what happens if we don’t.”

“As Mayor I would make the sale of any significant asset subject to annual plan consultation, and this would include any change to council’s airport shareholding, financial assets, the port or community assets such as golf courses.

“But we have to be prepared to have this debate. At the last LTP 90% of the 23,000 people who submitted on the plan asked for spending in support services to reduce and yet expenses rose $171 million or 7% in 2015 compared to last year.”

“I’m disappointed the Mayor has dismissed the report. For five years, he has ignored a review of Auckland’s balance sheet. His reaction shows how important it is to have someone with a business background as Auckland’s next Mayor. There are significant opportunities with these reports, to both reduce rates, boost investment and maintain control where we need to.

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