A number of major projects in South Auckland are now facing funding cuts as part of the Auckland Council’s latest budget as it grapples with a massive hit to its revenue due to Covid-19.
For Manurewa-Papakura councillor Daniel Newman it is hard to take.
“This is going to be a budget that hurts and I wish we didn’t have to do it. It’s the hardest budget we’ll ever have to pass.”
In a preemptive warning last Friday, Mayor Phil Goff said the council was predicting a shortfall of over $500 million in revenue over the next financial year as a result of the Covid-19 crisis.
“The reality is, we have less money coming in, so we have less money that we can spend on the city and less money to deliver the essential services that Aucklanders rely on.”
Rates currently make up around 40 percent of council’s revenue. While the remaining 60 percent of its income comes from sources such as concerts and visitor attractions, pools and leisure centres, dividends, parking, development contributions and public transport fares.
But these traditional sources of revenue for council have dried up as a result of Covid-19.
Newman said with Auckland Council’s finances taking such a massive hit it was inevitable that it would have to look at cutting costs and deferring projects.
“It’s going to mean we will have to cancel hundreds of millions of dollars worth of projects. It also means we will have to review the services we currently operate.”
The council is now looking at a rates increase of between 2.5 and 3.5 percent, as well as taking on more debt and asset sales to pay for it.
Newman said one project facing cuts is the $1.4 billion Eastern Busway, which was expected to be completed by 2025.
“I would imagine we will have to defer parts of that project,” Newman said.
“And we will have to hit pause on some vital stormwater projects.”
Other projects that are facing funding cuts are the preliminary works for the Airport to Botany Mass Rapid Transport project and a planned Mangere cycleway. While plans for a new Auckland Council Manukau Hub will also be reviewed.
Newman agreed the massive cuts to council spending could have a contractionary effect on Auckland’s economy.
“The council doesn’t have any other option than to go down the path of austerity because we have a debt ceiling we have to operate within,” he said.
“Unlike the central government, we don’t have the ability to leverage our balance sheet.”
Manukau councillor Alf Filipaina said the draft budget illustrates the economic impact the coronavirus has had on the city.
“It’s a reality check for all of us around the effects Covid-19 has had and will continue to have,” he said. “For our community there are some projects that could be affected.
“But that might depend on whether we settle on a 2.5 or 3.5 percent rate increase.”
He said some projects could be deferred and some community facilities might have to look at operating under reduced hours and staffing levels.
“But we won’t know until we’ve settled on the final budget.”
Aucklanders will have until 19 June to have their say on the council’s budget.
To find out more and to have your say go to akhaveyoursay.nz/emergency-budget.
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