South Auckland to suffer as council projects revenue hit - Efeso Collins

3:11 pm on 12 November 2020

Auckland Manukau Ward councillor Efeso Collins says news the supercity is facing a projected $1 billion hit to its revenue over the next three years is hard to take.

Otara Health chairperson Efeso Collins.

Efeso Collins Photo: RNZ / Jessie Chiang

South Auckland was already hammered in this year's Emergency Budget and funding for a number of projects, including the Ōtāhuhu Town Centre upgrade, the Auckland Council Manukau Hub and Transform Manukau were affected.

Council announced on Wednesday that the $450 million hit to revenue from Covid-19 that was projected this year could now snowball to nearly $1bn by 2024. New forecasts show a decline in annual revenue of $260m in 2021/22, $170m the following year and $110m in 2023/24.

It followed councillors attending a closed-door workshop this week looking at its proposed 10-year budget, or Long Term Plan, which is due to go out for public consultation in December.

The council voted to approve the Emergency Budget in July.

Collins said at the time it was a budget that would hurt a lot of people in South Auckland. He said it was now depressing to think the cutbacks could continue after this week's announcement.

"The challenge before our city is how we manage the financial strain against the need to ensure that we continue to service the needs of the community," he said.

"Our financial situation is such that some of the projects in train will be impacted and during times of financial turbulence, inequity is highlighted."

He said Covid-19 had already had a noticeable impact on South Auckland where a lot of people had lost their jobs and there had been a corresponding increase in the need for food parcels.

"We can't take our eye off an equitable approach for all our residents and especially communities like mine that have suffered, historically, from underinvestment."

Collins said the lack of investment in South Auckland that occurred prior to the supercity would take strong advocacy and time to resolve.

Mayor Phil Goff outlined the new projected hit to the council's revenue on Wednesday.

"If we assume that borders could be closed for another two years, the latest forecast shows we could lose a further half billion dollars over the next three financial years, on top of the $450m revenue hit in the 2020/2021 financial year," Goff said.

"Many Aucklanders and Auckland businesses are doing it tough with reduced income. Council is in the same situation of having to do what we need to do with less money than we had planned to have."

Auckland mayor Phil Goff speaks to media following Cabinet's extension of the alert level 3 lockdown.

Auckland Mayor Phil Goff. Photo: RNZ / Dan Cook

Goff said councillors had to make some really tough calls in this year's Emergency Budget because of the city's reduced income.

"In this 10-year Budget, there will similarly be things that we want to do that won't be possible in the current financial environment. We will need to prioritise those things that are the most important to do."

Rates make up around 40 percent of council's revenue. 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.

These other sources of revenue have however dried up as a result of Covid-19. Industries like tourism, which have traditionally helped boost council revenue, aren't expected to recover any time soon. In July the council agreed to a 3.5 per cent rates increase, along with more debt and asset sales to pay for it.

With this week's projections showing the cuts to its revenue are likely to continue until 2024, more job cuts, asset sales and cutbacks are expected.

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