We being alarmist or have the chooks come home to roost?
Well after the pretty loud heads up last week it seems yesterday turned out to be crunch day when it comes to the preparation of the 2015-2025 Long Term Plan (master budget document) for Auckland Council.
$2.8 billion needs to be saved with apparently (according to Bernard Orsman from the NZ Herald) another $484 million a year needed stripped back from Council spending if Rate rises are to be kept between 2.5% and 3.5% per year.
Until we see something solid (numbers) – which wont be out until August I don’t find a point rehashing what the Main Stream Media and social media have already gnashed their teeth over earlier this morning. What I will do is collate up some of the commentary from around the place this morning for your consumption.
Starting with the Council Press Release from yesterday:
Next phase of Auckland’s 2015-2025 Long-term Plan process begins
The next phase in Auckland Council’s Long-term Plan (LTP) process is underway as elected representatives and officials meet to consider what the council should do during the next 10 years and how to fund it.
In March, Mayor Len Brown set the direction for a full review of the budgets and work plans of Auckland Council and its CCOs, and today’s workshop provides an overview of the sorts of things to be considered as Auckland plans for significant growth over the next decade.
“We need to make some tough choices to find the right balance between progress and affordability. Today we begin the conversation about how much we spend, when we spend it and what we spend it on to ensure Auckland’s communities and economy continue to prosper and the city remains a great place to live for all Aucklanders,” says Len Brown.
“In the months ahead, we’ll be asking Aucklanders about which major investments are the most important and affordable over the next decade to deliver Auckland’s vision to become the world’s most liveable city.”
The LTP is reviewed every three years. The next 11 months will see an extensive consultation process involving the council, its CCOs and the people of Auckland. The revised LTP 2015-2025 is due for adoption June 2015.
“Aucklanders want progress, especially on affordable housing and transport, but we know there is no appetite for large increases in debt and rates, so the next phase we begin today challenges us to find the trade-offs over the coming months to ensure increases are sustainable while still delivering on our promises – we can’t afford to do it all.”
Auckland’s first LTP in 2012 was based on the new council’s objectives but was still working with numbers carried over through amalgamation from the legacy councils.
This LTP provides the united Auckland Council with its first opportunity to realign those budgets and develop a 10-year programme of work based on a single plan and vision for Auckland.
Auckland Council Chief Executive Stephen Town says:
“The current LTP contains carry over numbers from the legacy councils and projects an average rates rise of 4.9% for each of the remaining years until 2022. To limit rate rises to between 2.5% to 3.5%, we need to be innovative and bold in looking at alternative revenue sources, reprioritising spending and finding cost savings to achieve our financial targets and take the pressure off households.”
“Auckland’s AA credit rating is testament to the careful and responsible approach we have applied to financial management. But we don’t have a blank cheque book to fund Auckland’s growth, and so we need to be clear about the priorities in the Auckland Plan.”
The LTP covers everything we do and how we pay for it – from collecting rubbish, building cycleways, delivering community services to investing in technology and innovation to ensure Auckland is a competitive global city for investment.
Detailed workshops will be held throughout July and August to help inform the Mayor’s Proposal for what activities should be prioritised, how to reduce total spend to keep rates low and alternative sources of funding for the 2015-2025 plan.
The Mayor’s Proposal will be presented in late August, and will then go out for public consultation so Aucklanders can have their say on shaping Auckland’s future.
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From the NZ Herald’s Bernard Orsman
Big cuts loom in bid to keep cap on rates rise
5:00 AM Tuesday Jul 8, 2014 [Updated]. Bernard Orsman
Cutting back funding for park maintenance, reducing library hours and scrapping inorganic rubbish collections are among options being considered by a cash-strapped Auckland Council.
Its finances have reached crisis point where severe cuts are necessary in a black budget to put rates and debt back on an “affordable” and “sustainable” path. But families fear the proposals will leave the city’s youngsters worse off.
To rescue finances, slashing up to $2.8 billion of new spending is required, as well as stripping up to $486 million a year for each of the next 10 years.
The first overview of the new 10-year budget discussed by Mayor Len Brown, councillors and decision makers yesterday included the $2.86 billion City Rail Link, which has an enormous flow-on effect.
The mammoth rail project dominates the transport budget, where other public transport initiatives like rail electrification to Pukekohe, rail to the airport, a cycling network, bus improvements and the North Western busway are candidates for reduced funding or the chop.
Roading projects that may not happen include the Penlink road from Whangaparaoa to East Coast Bays and upgrading Lake Rd between Takapuna and Devonport.
The transport capital budget could be cut by $1 billion over the next four years to $2.3 billion.
The Automobile Association’s Auckland Transport adviser Barney Irvine said “something had to give”.
“We’ve been looking at a situation where on one hand we’ve got this ambitious programme but on the other hand we’ve got this constrained funding envelope.”
Bernard Orsman: Hey big spender, you’re in a deep financial hole
6:25 AM Tuesday Jul 8, 2014. Bernard Orsman
The chickens have come home to roost for the Len Brown-led Auckland Council after four years of big spending and debt-fuelled budgets.
In simple terms, the council has been living well beyond its means and got itself in deep financial trouble.
While it has made savings these have not been enough to prevent the crunch.
It’s no different to a family mortgaged up to the hilt, with a new SUV on tick, trying to survive on the average 0.9 per cent wage increase.
This is Brown’s fourth budget as City Treasurer and first 10-year budget based on the plans and visions of the Auckland Council.
He calls it a realignment of the numbers of the former councils. It’s more political than that. It’s about setting “affordable” and “sustainable” rates to match spending and delivering the $2.86 billion City Rail Link.
It remains to be seen how Brown will fully fund the rail link with the Government ruling out tolls and congestion charges, and how the community responds to reduced library hours and closing community facilities to pay for his number one project.
Yes, Aucklanders are strongly in favour of the rail link, but this budget will test the limits of that support.
To achieve his goals, Brown must strip up to $486 million of spending every year from the budget. These are huge, scary numbers that make last year’s berm issues pale into insignificance.
Already, Brown is showing signs of wobbly behaviour by not guaranteeing to keep a key election promise to hold overall rates increases to no more than 2.5 per cent this term.
That was day one. There are 11 months until the budget is passed.
From the social media realm I take a look at both Transport Blog, and Keeping Stock (so a Progressive, Conservative comparison)
From Transport Blog:
Looking back at the existing LTP
By Matt L, on July 8th, 2014
Yesterday it emerged that the council is taking a knife to its next Long Term Plan and potentially start cutting projects completely in a bid to keep rates down. One comment that came through clearly yesterday was that the council will have to be careful what projects they cut because if they cut the wrong ones, like many of the PT and walking/cycling projects they should also cut the worlds most liveable city slogan too. Below is a press release from the council on the subject, the key point being that the public won’t get to hear what’s planned till late August.
…
The Long Term Plans is a 10 year budget but it gets reviewed every three years. In this post I’m just going to highlight what transport spending is planned in the current LTP which covers the period from 2012 to 2022. In particular I’m going to focus on the 2015 – 2022 parts as that’s what the council will likely be making substantial changes too.
When it comes to transport the current LTP is split into three sections:
Public transport and travel demand management
Roads and footpaths
Parking and enforcement
They can be summarised below (note: these are just the costs and ignore revenues and money from other sources e.g. the NZTA or government)
The chickens have come home to roost for the Len Brown-led Auckland Council after four years of big spending and debt-fuelled budgets. In simple terms, the council has been living well beyond its means and got itself in deep financial trouble. While it has made savings these have not been enough to prevent the crunch. It’s no different to a family mortgaged up to the hilt, with a new SUV on tick, trying to survive on the average 0.9 per cent wage increase. This is Brown’s fourth budget as City Treasurer and first 10-year budget based on the plans and visions of the Auckland Council. He calls it a realignment of the numbers of the former councils. It’s more political than that. It’s about setting “affordable” and “sustainable” rates to match spending and delivering the $2.86 billion City Rail Link.
In our post last week, we blogged that there was little appetite amongst councillors for a rate rise of greater than what Len Brown had promised during last year’s campaign; 2.5%.
To fund all of Brown’s grandiose plans, rates would have had to rise by almost double that, and a majority of councillors led by Deputy Mayor Penny Hulse voted Brown’s Long Term Plan down. That’s why they are back at the table now, going through the proposed budget line by line.
As for Councillors trying to work out the 2015-2025 Long Term Plan issues before the City? Well have a listen to Councillors Penny Webster and George Wood who are both chairs of Committees of the Whole within Council. Webster is Chair of the Finance and Performance Committee while Wood is Chair of the Regional Strategy and Policy Committee.
I’ll leave the interpretation up to you.
Review back on the 2012-2022 Long Term Plan
I will write a more full review of the current LTP later on. But a quick glance back to my own views (and submissions) to the current 2012-2022 Long Term Plan.
As recap though back in 2012 I wrote my initial gut reaction to the 2012-2022 Long Term Plan when that was up for submissions and deliberations. You can see my reaction back then here: My View on the Long Term Plan
Needless to say I had given that Long Term Plan a “Fail” mark and in my submission sounded warnings over Council finances facing the possibility of being in trouble from bad budget decisions. Fast forward to 2014 and I can see why Councillor Cameron Brewer is going “chooks coming home to roost” on both MSM and social media outlets. Looking back at my own submission, the Auckland Plan (and the submission I wrote on that) I see two things personally:
The Chooks have come back home to roost and we are looking a some tougher decisions on this 2015-2025 budget than otherwise should have been needed if we were more prudent with the 2012-2022 budget
The Auckland environment has changed so something things on the wish list in my submission like the East-West Link, Eastern Highway are dropped today while things like the Southern Motorway upgrade is sped up. Other things like the City Rail Link and the Manukau South Rail Link stay where they are now the same as two years ago.
And because Auckland’s environment changes so does its needs.
Talking Southern Auckland 