Auckland budget approved with partial airport shares sale

Fri, Jun 9

Wayne Brown has successfully passed his first budget as Auckland's mayor after a tense and emotional vote to approve a partial sale of his council's airport shares.

The budget proposal was passed 14 votes to six, with one abstention. It came after two days of debate with several alternative proposals suggested by councillors today.

Today's passed budget differs significantly as compared to the one first proposed in March and the "final" mayoral proposal tabled by Brown last week.

The final budget deal will see 7% of the council's 18% stake in Auckland Airport sold, an average residential rates rise of 7.7%, and an additional $105 million of borrowing.

Addressing the council, Brown said the budget was passed with "relief" and not joy.

"After 29 workshops and over 90 hours of formal discussion, we have reached a decision on the most challenging and contentious annual budget in the history of Auckland Council," the mayor later said in a statement.

Deputy Mayor Desley Simpson could be seen comforting a councillor after the vote.

Brown said: "A partial sale will mean we need to find another $37 million in operating cost savings or rates to balance the budget and fill the $365 million budget hole.

"This means we have had to reinstate $4 million of cuts for local board spending and will require the chief executive of council to find another $5 million of cuts to spending, bringing the total savings for Auckland Council to $33 million.

"This is the best, most prudent, balanced budget for Aucklanders that I've been able to achieve."

Two protesters were also thrown out of the meeting shortly before the vote as North Shore councillor Richard Hills spoke in support of the compromise proposal.

The mayor adjourned the meeting for 5 minutes while the protesters were removed.

Watch the council debate below

Earlier alternative proposals worked with the council's funding levers of selling its Auckland Airport shares, additional debt, a higher rates rise, or more spending cuts.

Last-ditch bid to save airport shares fail

Two earlier amendments to halt any sell-off of the council's airport shares were unsuccessful.

An earlier amendment by Manukau councillor Lotu Fuli was voted down — eight votes to 13 — with little consensus among either the council's left or right-leaning blocs. A tweaked version of Fuli's proposal was also put up for a vote shortly after but also failed a vote.

Fuli's amendment would have seen airport shares retained and a proposal to consider their sale in the council's 10-year plan in 2024. The proposal would be funded through additional "short-term debt" and slightly higher rates.

Yesterday, Brown said he would refuse to compromise on his proposal by taking on substantially more debt, calling it "the essence of financial mismanagement".

Councillors spoke passionately both in favour and against Fuli's proposal.

Albany councillor John Watson said a partial sale would become a "back door to a full sale" and that he "enthusiastically" supported the alternative proposal.

But Rodney councillor Greg Sayers, who supported Brown's original proposal to sell the council's entire airport stake, said taking on more debt was "kicking the can down the road" with additional debt hurting during any unexpected financial "shocks".

North Shore councillor Richard Hills agreed and made an impassioned plea about the mental health of council staff if he didn't vote "responsibly" for change today.

Manurewa-Papakura councillor Angela Dalton backed Fuli's amendment and said the upcoming financial year continued to be unusual and one that the council needed to "get through" first before looking to a major asset sale.

"Our communities are the ones that are sitting in the hardest deprivation, and they do own homes, and they do pay rates," she said.

Councillor Lotu Fuli.

"They have said they would rather pay higher rates and to take on a bit more debt to get us through these cuts, and to retain the airport shares."

Waitākere councillor Shane Henderson said he would feel "irresponsible" to support Fuli's amendment. He said the council "needed the debt headroom" to make up for infrastructure underinvestment, flooding-related issues, and the City Rail Link project.

This morning, Brown walked into the meeting wearing a cap with the words: "That's what I do. I fix stuff, and I know things." In opening the meeting, he then thanked councillors for "respectful and constructive discussion" in the past day.

Yesterday, only three supported Brown's original tabled proposal to sell all of the council's airport shares, leading the mayor to propose, what he dubbed, his "latest, latest budget" that saw a compromise to sell only 8% of the organisation's stake.

The final budget passed by councillors today included a revised-down sell-off of only 7% of the council's stake instead.

"I believe this proposal is the best, prudent, achievable, and balanced budget for Aucklanders," the mayor said on Thursday. "I've compromised on every funding lever."

The council is required by law to have a balanced budget and chief financial officer Peter Gudsell said spending cuts and rates were the primary movable pieces without additional revenue from selling airport shares or taking on more debt.

"Every $20 million is either 1% of rates, or it comes out of expenses, so to balance the operating budget in one way or another. It would have to be funded either from rates increases or from an expense reduction," he said today.

Brown said yesterday: "I've moved my new proposal to do a partial sale of the airport shares. This is an option available to us because we did consult on it, it has been audited, and it was supported."

Brown's Thursday proposal

  • Only 8.09% of the council's 18.09% stake in the airport would be sold. Brown said this would "realise around $1 billion" in order to pay off debt.
  • The average residential rates increase will now be 7.7%, one per cent above inflation. Brown's original March proposal was for an average hike of 4.66%, whilst his revised final figure was 6.7%.
  • Cutting $4 million from local boards and the mayor also proposed the council's chief executive find another $5 million in savings in the coming financial year.

The mayor said he would continue his plan to withdraw the council from early childhood education, but now only at a regional level, as local boards could optionally choose to keep funding centres from their own budgets.