New financial analysis reveals that Auckland could have a shortfall of more than half a billion dollars in revenue over the next financial year as a result of the COVID-19 crisis.

More than half—60 per cent—of the council’s revenue comes from sources such as concerts and visitor attractions, pools and leisure centres, operations at Ports of Auckland, dividends from Auckland Airport shares, parking, development contributions and public transport fares.

All of these sources have declined significantly as a result of COVID-19, with the overall hit expected to be $550 million less cash coming in over the next financial year.

“While rates make up around 40 per cent of council’s revenue, the majority of our revenue comes from non-rates sources like recreation facilities, transport, concerts, and dividends from council assets,” Mayor Phil Goff said.

“All of these sources of income have dried up over the last three months.

“We are forecasting a shortfall of $30 million in revenue just from community facilities, pools and leisure centres over the next year. We’ve already seen a shortfall of $1.1 million in revenue from the zoo in April, and expect another $5 million over the next year.

“Overall, Auckland Council is forecast to have more than half a billion dollars less income as a result of COVID-19. The reality is, we have less money coming in, so we have less money that we can spend on the city and less money to deliver the essential services that Aucklanders rely on.”

Revenue from rates could also fall next year, because the council is proposing to allow people in hardship as a result of the pandemic to postpone or defer rates payments, the mayor says.

“That’s the right thing to do, but it means council may suffer a shortfall of around $65 million worth of rates income in the time that it would normally be available to support the funding of services and facilities like libraries, leisure centres and parks.

“All of this adds up to a huge challenge for Auckland. As a city and a council, we will have to make difficult decisions to reduce costs while ensuring we can continue to deliver key services and invest in critical infrastructure the city needs and which boosts jobs and economic recovery. We also need to target assistance to those in the most hardship because of COVID-19 by deferring rates.

“We’re looking at every way possible to save money and reduce expenditure. We’ve asked staff to take voluntary pay cuts, and we’re conducting a review that will result in fewer jobs in our organisation in the coming months.

“It won’t be easy and we will need to make some tough choices in the coming weeks as part of our emergency budget. But I’m confident that together we can get through this and recover stronger as a city.

Finance and Performance Committee Chair Desley Simpson noted, “We know we are looking at a big revenue hole and we need to act to address it. That is why, over the next two months, we will be doing our bit to find and deliver savings and reductions across the business to fill that revenue gap.”

“This will inevitably mean we have to look at reducing capital spending but more importantly reduce operational spending next year. These are difficult decisions to make, but absolutely necessary if we want our city to recover as quickly as possible from this crisis and move forward.”

Example revenue shortfalls (estimates) for Council include:

  • Rates postponement $65 million
  • AIAL dividends $60 million
  • Ports of Auckland revenue $60 million
  • Drop in consenting and licence volumes $50 million
  • Reduced parking and enforcement fees $40 million
  • Revenue from leisure centres, holiday parks, pools and other community facilities $30 million
  • RFA income $40 million, including:
    • Zoo revenue $4.8 million
    • Auckland conventions/concerts $14.2 million