Auckland Council operating 'profit' rises to $660 million

Wednesday, 29 August 2018

Building for growth such as the City Rail Link tunnelling continues to play the big role in Auckland Council finances

Auckland Council's nearly doubled its operating surplus to $660 million, with revenue outstripping a more modest rise in costs.

The council said the biggest part of the $319m increase was in the value of privately built infrastructure, such as new roads built by developers, which had become council property.

An $18m boost in public transport fare income also helped on the plus side.

Mayor Phil Goff said the council was managing its finances well, but rising construction costs remained an issue.

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'Construction costs are going up relentlessly as they have been for a number of years now - that makes things harder,' Goff told Stuff.

'It means we're in a cost-pressure environment where we've put aside $26 billion (over 10 years) for capital expenditure.'

'The best time to do construction is in a recession, and we're in a boom,' he said.

Operating costs rose by a more modest 3 per cent to $3884m, with one of the largest single-ticket items being a boost in the provision for leaky building claims of $83m.

The council's brief unaudited result released on Wednesday morning gave only a high-level view of the finances, with its full annual report not out until late next month.

Costs which the council calls 'controllable' such as wages and consultants rose by 1.2 per cent.

The council said the consequences of catering for rapid growth accounted for much of the change in its numbers.

The value of its assets has risen by $4.1b in a year.

Debt had risen by $253m to $8.2b but was still within prudential limits, Goff said.

Higher rates, and growth in the number of ratepayers meant higher rates revenue made up 40 per cent of the revenue boost.

It said some of the higher staff costs came from increases at its agencies, and the need to bring in consultants to manage a rise in building and resource consenting, as building activity rose.