Coronavirus: Auckland Council's $1 billion rainy day plan

Sunday, 29 March 2020

Auckland Mayor Phil Goff announces Auckland Council facilities will close (video first published in March).

Auckland Council won't know for weeks the scale of the financial hit it will take from coronavirus, but says it has a $1 billion back-up if needed.

The council is facing a combination of lower revenue from public transport and big cuts in dividends it had expected from its 22.3 per cent stake in Auckland International Airport, and from its port company which is investing heavily.

Council finance staff are spending the first part of the four-week lockdown working on three possible scenarios it may have to consider when setting its annual budget in June.

Phil Goff, the mayor of Auckland, is looking into ways to help the hotel sector.

'There's no cause for concern' was the main message when chief executive Stephen Town spoke with Stuff.

**READ MORE:

Auckland Council is facing a financial loss, in part due to declining patronage on public transport as the roads lie empty during the coronavirus lockdown.

* Coronavirus: Full coverage

* Coronavirus: 90 jobs gone after Auckland Airport suspends second runway

Auckland Council's chief executive Stephen Town says there's no cause for alarm.

* Coronavirus: Councils cut back as virus hits books

* Coronavirus: Lower gathering limits would hit public facilities and council cash flow**

The loss of dividends from its stake in Auckland Airport is just one of the financial hits Auckland Council faces (file photo).

'We have had very robust [financial] arrangements in place for a very long time,' he said.

In addition to its own reserves, Town said the council had access to a $1 billion line of credit through 10 financial institutions which was available for operational costs.

The line of credit is like an overdraft, rather than a loan which councils can only take on to build something and not use for operating costs.

The council's credit rating with major agencies is second only to the government's, Town said.

'We are an incredibly stable institution in our own right.'

An early hit has come from the airport, which has scrapped its half year dividend. The council had forecast earning $58 million in dividends this year from its shareholding.

Part of the financial uncertainty is whether ratepayers may struggle to pay when the next quarterly instalments are due at the end of May.

'We have got established policies for all who are financially challenged, and we are having a look at them in the light of the broader financial forecasts,' Town said.

An early call for relief has come from the hotel sector which wants to discuss the $14 million additional rate imposed on accommodation properties from 2017, in an initiative by Mayor Phil Goff.

The sector is already appealing the Accommodation Provider Targeted Rate brought in to help fund major events and tourism promotion by a council agency.

Goff has said he has asked for options that might provide assistance to the sector.

'I will shortly be able to outline what steps we can take to help, while ensuring we can maintain the financial resilience of council itself,' he said.

Auckland Council now has more than 5000 staff working remotely, mostly from homes, compared with a normal level of only 200 staff.

Town said on Friday there were only 57 people working out of the five main council offices.

'Things have changed significantly – going to 5000 has required us to make important technical adjustments.'