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Auckland Council urged to show financial leadership
On 10 March, our former Chief Executive, Paul Evans, delivered a presentation to Auckland Council focussing on the need for more significant infrastructure investment in its ten-year plan. Here's his summary of the presentation and outcomes.
Scale and complexity like no other
ACE members understand that addressing critical community needs is incredibly complex and that our sector has an essential part to play in that process. Members also empathise with the Council's financial challenges and acknowledge that the scale and complexity of the Council's decisions in this constrained environment are like no other.
In short, we understand there is enormous political pressure to keep both rates and debt low while needing to provide for a rapidly growing and under-served city.
The importance of infrastructure
I highlighted how infrastructure investment is always relevant, but particularly so in a post-COVID environment. For example, past economic challenges had demonstrated the effectiveness of infrastructure as a form of stimulus which provides a lasting return on investment. Once delivered, these assets continue to enhance our social, economic and environmental wellbeing rather than being a one-time expenditure. Such infrastructure also improves our resilience to future economic downturns and facilitates more rapid recovery.
I quoted figures from a report that ACE developed together with Shamubeel Eaqub from Sense Partners. This included:
- Infrastructure is job-rich and supports seven jobs for every $1m invested
- Permanent economic output improves $10m each year for every $100m of public capital created
- Our current infrastructure deficit in Aotearoa is $75b, and a large proportion of that deficit is sitting in Tamaki Makaurau.
I also outlined that while there's a well-established need to catch up on past work, there's also an imperative to invest in future-fit infrastructure. For example, significant investment must support the Council's policy goals like halving our emissions by 2030.
What happens if we don't invest appropriately in infrastructure?
I stated that the pipeline's uncertainty and lumpiness significantly undermine member firms' confidence and investment, ultimately costing jobs and impacting productivity.
Auckland Council's proposed ten-year budget
I told the Council I could not enthusiastically support the proposed ten-year budget as the investment earmarked for infrastructure is simply far too low. I suggested the $35B investment scenario outlined in the Council's consultation documents was far more appropriate.
I also somewhat controversially noted that the rates increases proposed in Tamaki Makaurau are too low and don't reflect the scale of challenges the city faces. The proposal of a five per cent increase for the coming year and a return to "normal" after that is out of line with increases seen elsewhere. This is an austerity approach that is already causing uncertainty, costing jobs, decreasing economic activity, and ultimately costing lives.
Similarly, I stated that the Council's debt approach is far too conservative. Council debt levels in Aotearoa are arbitrary, self-imposed and low, and the Council should be using greater debt funding for infrastructure projects.
I outlined support for the Council's proposal to increase investment in climate change. Still, I noted that the investment level is too low, particularly when we have to halve our emissions in the next 8 ½ years (the period covered by this Long Term Plan).
I asked the Council if they could honestly say that the proposed investment will support the halving of emissions. I emphasised that, as an example, the current investment in transport initiatives is entirely at odds with this goal.
I noted support for both the extension and increase in the Water Quality Targeted Rate but called for a quicker start to new water-related projects.
Transport as an investment exemplar
Here I zeroed in on transport as a perfect example of past underinvestment, insufficient future investment and where the current investment is often misaligned with our broader goals.
I stated we could not support the $3.7B transport investment package but would cautiously support the $4.2B investment package. Even then, I explained that this level of investment is wholly insufficient and that more investment is required if we intend to give effect to Te Tāruke-ā-Tāwhiri (the Council's climate action plan).
Sadly when we see long term investment scaled back from where it should be, it is invariably public transport, walking, cycling and safety initiatives that suffer. Ironically these are the areas where we should be doubling down on investment.
How does cutting these give effect to emissions targets and Vision Zero? It doesn't!
I reiterated the need to invest more in transport, but we can't solve this by just throwing more money at the issue. It's also about critically examining and aligning our existing spend.
So, yes to more funding. But also yes to better investment priorities.
Bold leadership is needed
I have worked in and with local Government for the last 20 years, and I have constantly heard the "not this year" line, which has created our $75B infrastructure deficit.
We have a once-in-a-generation opportunity to invest at the lowest servicing costs in living memory. There are well-established needs and future policy goals that we must meet. Simply put, if we don't invest, we won't meet those goals.
So I asked the Council, if not now, then when?
In my view, if we are not willing to invest now, we will probably never invest, at least not in the current paradigm.
This constant burden-shifting to our rangitahi is not just irresponsible; it's wrong. Political palatability shouldn't always override what the right course of action is.
I implored the Council to show courage when it comes to both rates and debt, invest heavily, smartly and appropriately in their communities while also supporting certainty of work, economic activity, and enhanced productivity.
That is a path that will lead to a legacy worth remembering!
I finished with a whakatauki (Māori proverb).
Kaua e mate wheke mate ururoa - Don't die like an octopus, die like a hammerhead shark.
Where an octopus gives up, a hammerhead shark fights to the bitter end.
In leadership, we all need a little more fight!
Consultation on the council's 10-year budget 2021-2031 closed on 22 March 2021. Council is reviewing all feedback throughout April and May and the Governing Body will adopt the final budget in June 2021.