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Airport shares to fund community projects

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Staff Reporter

15 May 2024, 7:19 PM

Airport shares to fund community projectsMayor Brown unveils revised budget plan

Mayor Wayne Brown unveiled a revised mayoral proposal for the Long-term Plan (10-year Budget) 2024-34 at this week's Budget Committee workshop.

This plan includes a new approach to establish the Auckland Future Fund, initially capitalised using the council’s remaining shares in Auckland International Airport Ltd (AIAL).

“My new proposal would see the Auckland Future Fund established faster, without the port lease, creating a potential windfall gain of around $20 million next year," Mayor Brown said.

"I’m proposing that this money be channelled into a reserve fund to fix and finish community projects for legacy councils that didn’t sell their airport shares before merging into a single Super City."

The Auckland Future Fund, valued at approximately $1.3 billion with the airport shares alone, is intended to provide higher and steadier returns than the dividends currently received from the AIAL shares.

Mayor Brown highlighted that this option has the strongest public support.

He also noted that the council would retain its existing self-insurance fund rather than complicating matters by using the new fund for self-insurance.

Based on independent advice, the fund’s cash contribution to Auckland Council is expected to be $400 million more than its dividends from AIAL shares over the next 10 years.

This translates to a 2.2% annual savings for each ratepayer.

The revised mayoral proposal outlines a rates increase for the average Auckland residential property of 6.8% in FY25, 5.8% in FY26, and 7.9% in FY27, with an average rates increase of no more than 3.5% for the rest of the Long-term Plan 2024-34.

“I’ve proposed the lowest rates increase of any metropolitan council in New Zealand," Mayor Brown stated. "It’s less than half the national average, and this year’s rates bill will be even lower than what I originally consulted on.”

Water charges will also be significantly lower than projected, with an increase of 7.2% rather than 25.8%.

This reduction is attributed to a new operating model for Watercare that the Mayor negotiated with central government.

Under the Mayor’s final proposal, the average Auckland household will pay an extra $6.38 per week in rates and water charges, compared to $11.79 under the original proposal.

To ensure financial sustainability and to prevent wasteful spending, Mayor Brown has proposed that the council group find additional savings of $141.8 million over the next three years.

This is in addition to the $83 million in savings found in last year’s annual budget.

“We are responding to what our communities are telling us, that people are hurting financially. We can help ease the pain by keeping rates as low as possible,” Mayor Brown said.

The Mayor is proposing to set aside increased returns from the Auckland Future Fund in the first year, estimated at $20 million, to fix and finish important community projects.

This will focus on areas from the legacy Manukau City and Auckland City councils, which did not sell their airport shares before amalgamation into the Super City.

“It’s been pointed out that some areas of Auckland have already benefitted from the sale of airport shares by legacy councils," Mayor Brown explained. "

Also, some local boards have benefitted more than others from the asset-based funding model put in place since amalgamation. My proposal will redress this imbalance.”

The Auckland Future Fund will be protected to ensure it cannot be raided for short-term gain.

It will be established as an unincorporated non-charitable trust with high levels of protection against divestment.

Legislation is also being sought for added protection.

A local bill has been drafted, and further steps will be taken once the Auckland Future Fund proposal is passed.

The final mayoral proposal will be considered by the Budget Committee for endorsement and adoption by the Governing Body today.