Redundancies expected as Auckland Council predicts $550m revenue shortfall due to Covid-19

Source: 1News

Auckland Council says it is staring down a $550 million revenue shortfall over the next financial year due to the impact of Covid-19.

Auckland Mayor Phil Goff.

Mayor Phil Goff said this morning that more than half of the council's revenue - 60 per cent - comes from things like concerts, visitor attractions, pools and leisure centres, Ports of Auckland operations, Auckland Airport share dividends, parking, development contributions and public transport fares.

Mr Goff said those sources of revenue have all declined significantly as a result of Covid-19.

"We are forecasting a shortfall of $30 million in revenue just from community facilities, pools and leisure centres over the next year," Mr Goff said.

"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."

Mr Goff said that the 40 per cent of revenue collected from rates could also fall, as plans are in place to implement deferment schemes for those in hardship.

"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," he said.

"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 said "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," Ms Simpson said.

"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."