Budget Calculator – How Would You Set the Long Term Plan

Missing Crucial Element

 

Auckland Council as part of the Long Term Plan Consultation have released a budget calculator as an educational tool in setting a Long Term Plan (Budget). I have played around with it and will show the general result further down. But first the presser:

Aucklanders invited to calculate own city budget 

Auckland Council has today launched an online budget calculator that gives Aucklanders a go at setting their own 10-year budget for the region.

The interactive tool allows users to save money or spend money depending on what they see as a priority for the city. The choices they make affect levels of household rates and council debt – making them rise or fall. 

Matthew Walker, General Manager Financial Planning, says the calculator is an educational tool designed to give Aucklanders a greater understanding of council’s budget.

“The budget calculator is all about giving Aucklanders a chance to sit in the driver’s seat and experiment with the budget. It demonstrates how and where council spends money as well as the trade-offs you make when you decide to spend less or more,” he says.

The budget calculator, which is set at the proposed levels of spending in council’s 10-year budget, looks at five spending areas of Auckland Council including transport, parks, community & lifestyle, economy tourism events and culture, Auckland development, and environment & regulatory.

On finishing, the budget calculator produces three graphs that show the impact of each user’s spend on debt, assets and rates across the 10-year period.

Public consultation on council’s 10-year budget runs until 16 March 2015. There are a number of ways to feedback including an online feedback form found at shapeauckland.co.nz, a hard copy form (found in council libraries, service centres and local board offices), using social media and at the ‘have your say’ events. 

Auckland Council is also hosting a live online chat today (Thursday 5 March from 7pm – 9pm) that will cover the key issues included in the 10-year budget. Those who wish to take part can post comments and feedback in advance now at www.shapeauckland.co.nz/livechat  or join the discussion on the night.

Feedback from the live chat will count as feedback for the 10-year budget consultation.

 

Further Information

The link for the budget calculator is www.shapeauckland.co.nz/budgetcalculator

The budget calculator is intended solely for educational purposes. The calculator does not include all areas of council spending and numbers are approximate.

—ends—–

 

I noticed the calculator did not include Governance and Support which has attracted a lot of attention from Long Term Plan submitters. Probably because if the type of attention Governance and Support (staffing falls into this) (see: 6,000 SUBMIT TO THE LONG TERM PLAN THUS FAR where over 85% of submitters want cuts to Governance and Support).

 

So without further ado below is what Council’s budget is and what my budget is in comparison.

First the Council Budget:
Auckland Council Budget (Providing the Baseline)
Auckland Council Budget
(Providing the Baseline)

 

And this is my Budget
My Budget and relative comparisons to Council's budget
My Budget and relative comparisons to Council’s budget

First of all I was made aware that Governance and Support was to be a budget line. However, after the Beta Tests keeping showing just about everyone reducing that line as far as they go Council decided to remove it.

Rather poor form of Council to remove the Governance and Support budget line (Staff numbers) if it is attracting such support. If it was included I would have dropped that particular line in terms of staffing costs from $720m as of current to around $500m. That would have further reduced the spend by an extra $200m/year over the ten-year period or some $2b opex wiped off the $56.81b budget over that same period. Hmm that means dropping the LTP spend by some 4.13% over the ten-year period (this includes the 0.62% I could save already without the Governance and Support line).

That kind of drop if realised would put less pressure on the rate intake needed and probably trigger a $1000 average saving (using the Council rate average) rather than the $559 saving I manage to pull (which includes the Motorway User Charge).

 

So if I were Council I would put Governance and Support back in there and see what happens. If it comes back with an absolute majority wanting cuts then well respect that from the citizens and start cutting that line rather than arse cover as current.

 

Budget Breakdown

What the pictures above do not show is the breakdown done to get my final answer. In brief I did the following:

Transport
  • Increased public transport expenditure
  • Dropped Cycleway and roads expenditure at varying levels (cycleway investment Central Government can pick up more on to counter-balance)
  • Increased Maintenance expenditure
Parks and Leisure Facilities
  • Increased expenditure for new facilities as Auckland is under a boom
  • Increase park maintenance again reflecting the boom
  • Increase CAPEX for new libraries and community facilities again reflecting the boom
  • Events and community services spending was dropped one level
Events and Tourism
  • Business and Tourism had its spending cut from $614m to $123m
  • Regional Facilities had a slight increase in expenditure
Auckland Development

Now this one is bound to cause controversy for sure after what I did to this budget line

  • City Centre investment I dropped from $129m to $23m. The targeted rate the City Centre has can be extended in its catchment to capture more City Centre residents and businesses. At the same time that rate can increase while more leverage off public private partnerships needs to happen to fund City Centre developments
  • Waterfront or rather Waterfront Auckland I slashed its budget to absolute zero! If it wants money to invest in Wynyard Quarter it can go leverage more off private sector partnerships . At the same time the City Centre targeted rate can be extended to cover Wynyard Quarter as well
  • In contrast I lifted the Town Centre budget (includes the Metropolitan Centres) from $187m to $384m the maximum limit it allowed. This would boost needed investment in our run down and struggling Town and Metropolitan Centres. It would also allow the Metropolitan Centre Master Plans to be drawn up and executed as fast as possible
Environmental and Regulatory
  • Stormwater expenditure I increased to $1b to allow us to get ahead for once in adequate storm water infrastructure development. This has benefits further down the line such as less upgrades while we boom being needed as well less overflows in storm events

I “ticked” the Motorway User Charge option in the transport budget line. This does take pressure of the rating base for transport investment for sure. However, my support on the toll is conditional for it to be used a demand management tool once the public transport system is up to full scratch prior!

Also not included as an alternative revenue source is Development Auckland being a more proactive developer and landlord (see: THE REACTION TO MY PRESENTATION TO THE AUCKLAND DEVELOPMENT COMMITTEE [UPDATED WITH FIGURES AND LINKS] )

 

Finally while I did have a slight increase in capital expenditure I have offset that in lower operational expenditure (would have been lower if Governance and Support was in there). This results in lower rates increases than what Council has proposed while a slight increase in overall debt levels. Again my alternative (linked above) would have either lowered the increase in debt or even lower debt levels overall over the ten-year period. While I did also to manage save the average rate intake by some $559 I did have the motorway toll in there so there is a counter-balance in effect.

So what do you think and what did you get with the calculator?