Phil Goff –
The Auckland Council has to learn to do more with less.
That was the thrust of the fiscal policy which I announced last week as candidate for the Mayoralty.
Projected rate increases in Auckland’s Long Term Plan of 3.5% on average will be trimmed back to no more than 2.5%.
Rate rises are capped at that level.
The reduced income from rates will be compensated for by each Council department being required to find efficiency savings of 3% to 6%, which will, within a couple of years, result in savings of around $70 million a year.
This will pay for areas where costs facing Council have risen, for new spending areas and where possible the reduction of Council debt.
Saving methods
There are a number of ways in which the Council will be expected to make savings and ensure that the ratepayers get better value for each dollar spent.
The Council will be required to identify and report on underperforming programmes and low quality spending.
Staff and those dealing with the Council will be provided with an opportunity to identify and promote ways for Council to operate more efficiently.
The Council’s procurement system for goods and services accounts for roughly two thirds of Council expenditure. Changing procurement systems to achieve best practice could save Council around $50 million a year when fully implemented.
Hard look
We will look hard at areas where services have been contracted out to see if these are cheaper or more expensive for the ratepayers.
By bringing back in-house services in South Auckland for animal control, the Council has saved $600,000 a year. Further such savings should be sought.
We want better infrastructure for Auckland – improved transport systems and more housing development to meet the needs from growth in population.
Capital spending on these should not come out of rates.
Nor can we just borrow the money in the normal way because the Council has almost reached the limit set for prudential borrowing.
Funding sources
How then do we pay for these?
Firstly, we need a fairer deal from central Government.
Auckland currently absorbs more than 50% of the country’s entire growth and soon that will reach 60%.
Most of the benefit from this growth in terms of revenue goes to the central government through extra GST and income tax.
But Auckland has to bear the cost of the infrastructure to support the growth.
Infrastructure Fund
The best way for the government to return a fair proportion of that revenue to Auckland is through the ‘Infrastructure Fund’ it recently announced.
The $1 billion Fund covering five growth areas meets just a fraction of the $20 billion needed for infrastructure development for Auckland alone that is currently unfunded.
Some of the infrastructure will need finance through the private sector in Public-Private Partnerships or Build Own Operate Transfer Schemes.
That is where the private sector charges for use of the infrastructure it creates and returns the infrastructure to Council after 25 years.
Some form of road pricing like a regional petrol tax will also be needed to fund infrastructure in the short term.
This is preferable to putting the cost of transport infrastructure on the rates bill.
The transport levy imposed on rates by the Council should come off as rates bear no relationship to use of motorways.
In particular, retired people end up paying for things like peak hour motorway travel when they do not use it.
One thing I don’t want to do is use assets like our 22% Airport Shareholding, Watercare or the land that the Port operates on as one-off sales to fund new infrastructure.
I believe that strategic assets should be kept.
Even the Treasury has advised that it doesn’t make sense to hock off assets for a one-off gain when it is more valuable to Auckland rate payers to hold on to them.
Phil Goff is a candidate for Auckland Mayoralty.
