Cutting our cloth – and the rates – essential

Opinion from Chris Darby, chair of Devonport-Takapuna Local Board
Times are tough and it’s number-crunching time for community leaders to make tough calls in cutting council budgets to drastically reduce next year’s [2013-14] projected rates increase. We support Len Brown’s organisation-wide drive to reduce the projected average 5.2% rates rise – but we question the process being followed.

In these challenging economic times this is something we need to collectively work on to pare back to a drastically lower level.

Mayor Brown has asked the entire council group to suggest changes to the way we work and propose how we might defer or reprioritise projects, or introduce cost-saving innovations that could reduce council’s costs by at least 3% to help us reduce rates rises as much as possible. This is about the way we deliver services and possible changes to service standards.

While the mayor and council have yet to formally consider any proposals, all council forums have been providing the Mayor with their views.

My view is that council as a whole should be working to reduce the forecast rates increase to less than 3%. This is no small feat but achievable if there were a collective will to do so. Just as families and businesses are being forced to review their budgets so too must council.

We’ve all been told to cut our cloth and I respect that as our communities expect it of us.

Auckland Council is the single biggest services business in town, with almost $60 billion in expenditure planned for 2012-2022, and a major contributor to the economy and daily lives of Aucklanders. We have before us an enormous challenge, a challenge which I believe the public expect us to take on. To not partake in addressing our collective spend is tantamount to passing harsh sentence on our residents and businesses.

Lower CPI (inflation index) and interest rates for council borrowing will both go some way to help reduce costs, however, without reviewing regional and local budgets aggressively, we will fall well short of community expectation.

During October, Auckland’s local board members, councillors and staff will identify ways to refine budgets, including reviewing service levels – a thorny issue at best. The council’s stated intention in developing cost reductions of at least 3% is to provide the mayor and councillors with options for setting a budget with a reduced rate requirement from the 2012-22 Long-term Plan. These savings are over and above the $121m in cost reductions and efficiencies already delivered or committed to.

While accepting the need to trim budgets, I question the “broad brush” approach to the controversial task.

A far better approach, as I see it, would be to sieve out the high quality spend from lesser quality of spend and make initial reductions in the second category. We could look towards Europe where general austerity plans have been rejected in favour of budgets which are more precise, maintain targeted economic stimulus and trim excess. In Auckland’s case, where we have an insatiable appetite for public transport and continue to play catch-up, maintaining our planned investment levels in bus, ferry and rail is crucial.

While reducing spend will be critical, it will be equally important in the 2013/14 Annual Plan process that any new capital or operational expenditure be resisted with discipline. The third strand of the budget process is to examine opportunities for creating new non-rates revenue and consider adjustments in fees and charges to ensure a drastically lower rates increase is achieved.

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