22 May 2020

Auckland Council predicts $500m loss

7:48 pm on 22 May 2020

Thousands of Auckland home and business owners are expected to postpone up to $85 million of rates payments in the coming financial year.

Mayor Phil Goff said Auckland was experiencing its worst drought on record.

Photo: RNZ / Dan Cook

Auckland Council plans to offer a rates holiday to ratepayers facing financial hardship because of Covid-19, and it estimates 11,000 will take up the offer.

Mayor Phil Goff said it was the right thing to do despite the council anticipated shortfall of $550 million due to the coronavirus, which accounts for half the estimated $1 billion councils throughout the country will lose next financial year.

"A loss of half a billion dollars of revenue in a singe year would be the biggest revenue hit that any council in this country has ever taken," he said.

"There will be a sharing of the pain right across the board. Our first priority has to be to manage our finances responsibly and prudently which means we've got to cut back that revenue loss with reductions in spending."

Almost two thirds of the council's money comes from concerts, leisure centres, Ports of Auckland, dividends from Auckland Airport shares, parking and public transport fares.

The rest - 40 percent - comes from rates.

Other regions RNZ contacted were counting losses far less than Auckland, but would still be in the red.

Wellington City Council estimated it would have a revenue shortfall of about $70m and was also offering rates holidays.

Christchurch estimated it would lose $66m in the next financial year, while Hamilton put losses at $33m.

Local Government NZ estimated councils' combined losses due to the coronavirus to be up to $1bn and its president Dave Cull said it was not surprising Auckland accounted for half of the shortfall.

He said rates made up 60 percent of most other councils' revenue.

"Auckland's the biggest place in the country and it doesn't surprise me their shortfall is that much, espeically given a higher proportion than normal of Auckland's funding comes from non-rates sources, so they've taken a real hiding."

Cull said each council would cut costs according to their own situation.

"There are essential servivces which our communities all expect that you cannot go below," he said.

"Water has to run, the sewage has to be taken away, waste has to be collected, roads have to be kept in good condition, there's a bottom line there which no community would want to go below."

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