It’s 10-year planning time. The time when the mayor sets out his vision, his plans to realise that vision and the budget he will use to do it. But there’s a $6 billion hole in the money that needs to be spent on Auckland, and right now Phil Goff has no idea where the council’s share of it is going to come from.
Mayor Phil Goff sat in the anteroom of his office on the 27th floor of the council buildings last Friday and did his best to stare, cajole, humour, persuade, flatter, argue and politick the prime minister into seeing things his way. The prime minister, Bill English, wasn’t having any of it.
Goff has a very serious problem: he doesn’t have the money he needs to run the city. Following his failure with the PM on Friday, councillors are meeting with officials behind closed doors today, to start the process of drawing up a 10-year budget. They’ve already slashed general expenditure (they did that in the one-year budget adopted in June) and now they’re staring at a $5.9 billion shortfall in the amount of money the city needs for new transport spending. The government will pay most of that, but the council doesn’t have the funds for its own share.
Plus, as Goff explained at a briefing on Monday, they have to find $1.7-$1.8 billion to spend on new water and sewage services. Earlier this month the council discussed (inconclusively for now) charging for use of playing fields. The art gallery no longer has an operations budget. Nor do lots of other council organisations.
They can’t borrow, because they are at their debt limit now. Go higher, and the city will lose its AA credit rating; and because of the way local body finances work, that will drag down the credit rating for councils all over the country. Borrowing more under the current rules is not an option.
On the campaign trail last year, Goff promised not to raise rates beyond 2.5% a year. So that’s off the table too, at least as far as he’s concerned. It’s not true, as some are suggesting, that Goff is softening us up for big rates rises. He’s dead against it. But it is true that some councillors, including the chair of the finance committee, Ross Clow, have argued for a higher rise.
Goff also promised not to sell, or part-sell, strategic assets like the airport and Ports of Auckland.
What Goff wants to do is raise money from a regional fuel tax. Or, failing that, from tolls on some key motorways. But these measures need government approval and the government has consistently said no.
This is the political battle of his mayoralty. If he persuades the government to let him gather new income from road use, Phil Goff will be able to preside over the transformation of Auckland into an efficient, modern and potentially very splendid city. If he doesn’t, he’s going to have to break campaign promises and get extremely brutal on council spending.
Or, allow the transport and housing and water and sewage and all the other creaking infrastructure of the city to continue to collapse.
In the mayor’s anteroom there’s a horseshoe of three brown leather couches around a low table. A bookshelf wall, with books and a few mementos, official gifts, photographs. Artwork that’s been recently changed and a really beautiful view across the central city to Albert Park, onto the downtown rooftops with their tennis courts and little gardens, down to the cars and container cranes on the waterfront and out to Devonport, Rangitoto and the Hauraki Gulf beyond.
It’s an inspirational and absorbing view. As they sat there looking at it on Friday, Goff told English, again, that if the government did not introduce a regional Auckland fuel tax, or allow tolls on some of the city’s key roads, there was no way they could raise their share of that missing $5.9 billion.
English made it clear the government would pay the major share of the missing billions. Goff said yes but if they had to use rates for the rest, Aucklanders would face an increase of between 16 and 27%. Remarkably precise figures; they’ve been running the numbers.
To be clear, no one is actually going to ask anyone to pay another 27% on their rates bill. Or 16%.
But what about 5%? At the Monday afternoon briefing Goff reminded those present that he had one vote in 21 on council. He said repeatedly that he remains committed to his 2.5% pledge, and also said, because he doesn’t control the other 20 votes, “Of course I can’t commit council to 2.5%.”
But the government believes the council does have other options. One is the interim transport levy, that added nearly 5% to our rates bills a couple of years ago and is due to end this year. The argument for keeping it in place is that we’ve adjusted to paying it, the hardship has been endured, so why forfeit the money now?
The argument against is that to turn a “temporary” charge introduced for an emergency purpose into a permanent tax would be a gross breach of faith with ratepayers. The reputational damage to the council and everyone involved in it could be immense and long-lasting.
What about selling assets? There’s no great clamour for this. Both the airport and the port are consistent earners for the council and it would be very panicky to sell all or part of the port when its long-term future is still to be decided. That’s a decision for a later day.
Goff’s regional fuel tax proposal has been Labour Party policy for years, which is one reason the government opposes it. Also, it’s a new tax, which they have been careful to avoid.
What about the return of tolls on the harbour bridge? A toll on the Newmarket viaduct and another at Sylvia Park? “You would think it would have to be on major routes, some of the motorways perhaps,” Goff said on Monday. But English had already told him no the previous Friday. That’s a new tax, too.
In fact, given the enthusiasm transport minister Simon Bridges has recently shown for more motorways, it’s very hard to see this government agreeing to put a tax on any of the existing ones in the immediate future.
The council and government do agree about the eventual introduction of congestion charging: a special levy on vehicles using the roads at the busiest times, or using the fast lanes, or coming into the central city or other hot spots. Finance minister Steven Joyce has said several times it will probably happen “at some stage” and the council has a working party looking at the options. But congestion charging will take a few years to set up and the funding gap needs to be bridged now.
In addition to the “no new taxes” line, the government has some political motives for saying no to Goff on road user charges now. One is that it provides a clear point of distinction: National is the party that won’t tax Auckland drivers any more than at present. Another is that it undermines Goff, a Labour Party mayor.
The decider, though, will not be any of those things. If the government believes Aucklanders will accept a road user charge to get the roads working better, it will make the policy change. Goff’s predecessor Len Brown demonstrated that process in action when he secured government support for the City Rail Link, after years of ridicule and rejection, by Joyce in particular, and by other members of the cabinet.
Goff now has to show he has the same political skills. Or wait for a change of government, of course.
Can Phil Goff produce a vision and a plan to back it that will win the hearts and minds of Aucklanders? Because that’s the key to winning over the government.
The document he’s gone to council with today is general. He says that’s because they’re entering a “workshop” process, out of which a whole lot of clearer ideas will emerge, so that in December he’ll be able to firm up his actual plans for the city. (Then in the new year, after adoption in draft form by the council, they will come to us all for public consultation.)
The document they’re “workshopping” now used to be known to everyone involved as the LTP. Goff’s changing that. “Nobody knows what LTP means,” he said (it stands for Long-Term Plan). “We’re going to call it the 10-year budget.” That’s a smart move.
But the vision? In a media release he said, “Our vision for Auckland is a world class city where talent wants to live. It must be the city which can keep the best and brightest of our young people in New Zealand while competing globally with other cities around the world for skills, entrepreneurship and investment.”
Goff’s said these things before, and he knows that the ideas and even the language (“where talent wants to live”) come directly from the late Paul Callaghan, scientist and entrepreneur. The fact is, though, almost every city in the developed world has the same vision. Everybody’s doing it. So what’s going to make Auckland special?
In theory, the answer is 2021. Defence of the America’s Cup, not yet announced for Auckland but very likely, will happen early that year. So will APEC, with its focus on a major world leaders’ summit in November but a year of conference and diplomatic activities leading up to it.
“The critical thing with the America’s Cup,” said Goff, “is to take the chance to leave a legacy for Auckland.”
I asked him what that legacy might be. He talked first about facilities for the teams, that would later have the potential to become a facility for the city. Perhaps a new wharf, and a new precinct for entertainment and hospitality. He seemed to be thinking very much about doing the Viaduct all over again.
He said Auckland would be able to showcase its boat-building industry. I asked if he would be advising Grant Dalton that as far as Auckland is concerned, we don’t want him pushing for a rule that the boats should be built in their team’s country of origin. He said he would not be offering Dalton any advice on the rules of the Cup.
I asked if he was thinking beyond that? The America’s Cup and APEC are a chance not just to attract tourists or to show off the beauty and culinary delights of the city. They ask the question: is Auckland a city geared to the challenges of the future? A place where the importance of good mass transit and good housing for all are understood? A city where the implications of climate change are integrated into all our planning and where there is a vigorous commitment to cultural, recreational and social life? A city bursting with new kinds of economic opportunity?
Those are the things that will make Auckland a place where talent wants to live. Smart new boat sheds and just the easy and obvious thing that has to be done.
Goff agreed. In his prepared statements for the 10-year budget process, he didn’t say it. He doesn’t naturally grasp the big potential in things, doesn’t seem to have an instinct for the big vision thing. But he did agree.
I also asked him, is Auckland now a city in crisis? He said, “Housing is a crisis for many people. And remember that it doesn’t have to affect everyone for it to be a crisis.”
He quoted the University of Otago study which suggests there are 23,000 homeless people in Auckland, most of them staying temporarily in unsatisfactory places – a relative’s garage, for example. The government disputes this figure, but it agreed with the methodology until it was used to produce the figure, and the Herald has fact-checked the figure, declaring it correct, just today.
Under Goff’s direction, the city has recently organised decent housing for 150 people, many of whom were sleeping rough. Goff says he knows that’s not nearly enough, but he is proud they have started to address the issue.
Whether Auckland is a city in crisis in other respects – transport, overfilled schools, overfilled hospitals, water and sewage that needs well over a billion dollars’ worth of attention, all manner of social pressures – he didn’t say.
But as a city that does not know where the money will come from to pay for the work that so urgently needs to be done, that’s all very clear. The next few months – from now until the election and then the short months to Christmas – will make or break Phil Goff as mayor.
simon@thespinoff.co.nz @simonbwilson
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