Source: Auckland Council
Auckland Council’s second quarter results confirm the continued impact of the pandemic and unfavourable economic factors.
Councillor Desley Simpson, Chair of the council’s Finance and Performance Committee, says with the uncertain outlook of the COVID-19 impact, unfavourable economic trends, supply chain challenges and a tight labour market, keeping these pressures front of mind will be key in managing council’s finances.
“There is no doubt that pressure on Auckland’s financial position is increasing.
“Although the exact impact of these financial risks is hard to predict, we continue to monitor them with a focus on long-term financial sustainability and recovery for the council.”
The most recent COVID-19 lockdown led to lower usage of council services, including public transport and community facilities, while the lockdown, ongoing supply constraints and staff shortages contributed to under-delivery of capital investment programmes.
At a group level, direct revenue was $35 million less than budgeted for. Revenues from public transport, parking and community facilities such as leisure centres were down due to pandemic-related restrictions. This was partially offset by infrastructure growth charges, which increased due to greater numbers of water connections for new and existing dwellings and regulatory fee revenue, driven by higher consenting volumes and increased complexity of consents.
Direct expenditure for the group was $43 million less than budgeted for, mainly due to work programme delays, reduced costs to services for public transport and cancelled or postponed events.
“That aside, the council has maintained its strong focus on cost saving and results show we are still on track to achieve our $90 million Recovery Budget savings target, reaching just over $70.6 million, or 78 per cent towards it,” says Cr Simpson.
Group Chief Financial Officer, Peter Gudsell says the economic impacts we are facing continue to affect our delivery of capital projects.
“Capital investment both at the group and council level has been affected by construction delays as the result of the COVID-19 lockdowns, supply chain issues and finding suitably skilled staff, affecting projects like the Matakana Link Road and Central Interceptor.
“However, despite these challenges, capital investment delivery for the council group was 71 per cent, or $917 million, of the $1,296 million budget for the period, and we delivered on some significant projects including stage one of the Eastern Busway and the Waikato boost pump station.”
To help fund capital investment in new assets, debt increased by $106 million. Borrowing this quarter included the issuance of council’s first offshore green bond of (EUR) €500 million.
There were no significant changes across the group for full-time equivalent employees, increasing by 381 over the six months ended 30 December 2021 to 11,310. This was mainly due to the filling of budgeted vacancies across the council, Auckland Unlimited and Watercare, along with the hiring of seasonal workers such as park rangers and staff to support summer programmes at our pools and leisure centres. Auckland Transport saw a slight increase in project and procurement staff in order to deliver on key projects, while Ports of Auckland saw a rise in stevedores and operational staff to handle supply chain challenges and lift productivity. The council has maintained the AA and Aa2 credit ratings from S&P Global Ratings and Moody’s Investor Services respectively.
Read the full Quarterly Performance report at infocouncil.aucklandcouncil.govt.nz [PDF]
