Final Chance to Have Your Say


Dear Readers, 

This will be my last newsletter on the Long Term Budget before feedback closes on Wednesday 28th March.

I am extremely sad to advise that as of last Thursday only 304 people have responded from the Orakei Ward. I strongly urge you to have your say. I will listen and promise my vote will reflect your feedback.

As you will be aware I’ve covered information on  general rates and the UAGC, the proposed new Water Quality rate and the proposed new targeted rate for Natural Environment based on capital values,  the mayors proposed fuel tax along with funding issues for the Auckland Art Gallery, new charges for rubbish collection, funding for Ohinerau ( Mt Hobson) and  Mt Wellington, Managing pests on Parks ( rats, stoats, possums, pigs and  cats) ,Adding more Community Recycling Centres, Heritage funding and investment ( or lack of) in Sport and Recreation.
This newsletter I’m going to cover

  1. The proposal to get rid of Auckland Council Investment Limited
  2. Increase in Water charges from Watercare
  3. Debt
  4. Staff numbers
  5. CCO Accountability

 - Desley Simpson
Councillor for Auckland representing the Orakei Ward


Proposal To Disestablish Auckland Council Investment Limited


Auckland Council is asking for feedback on a proposal to disestablish Auckland Council Investments Limited (ACIL). This is a Council Controlled Organisation that was set up at amalgamation to act as an arms- length entity managing Auckland Council’s significant investment portfolio away from the political arena and return a dividend to Council. Currently it has just two major investments: a 100% shareholding in the Ports of Auckland Limited (POAL) and a 22.3% shareholding in Auckland International Airport Limited (AIAL). Together these shareholdings return about $86m to the Council per year. ACIL costs just over $1m per year to operate.

The option to disestablish ACIL and absorb it into the Council Parent would likely save between $500,000 and $800,000 in expenses per year and could have some benefits to POAL through use of shared services. On the other side, there is the potential that this makes the long term commercial objectives of POAL more likely to be affected by political decision making and a risk is that this undermines the profitability (and therefore the dividend returned by) the company. Is this worth it for a savings of $500k -$800k per year?  With disestablishment of ACIL, the Airport and Ports of Auckland shares get transferred to Council and politicians . Do you think that’s a good idea? Have your say as part of the Long Term Plan consultation before 28 March #akhaveyoursay




In Council we talk about Three Waters, being water supply (tap water), waste water and storm water. Watercare Limited is a Council Controlled Organization that was set up under the Auckland Council legislation and it is responsible for water supply and wastewater. Unlike other CCO’s it doesn’t receive Council funding and has a very clear mandate to ensure that water costs are kept to a minimum practicable while maintaining their assets and provision of water and wastewater services. This also includes that they may not return any kind of profit or dividend to the Council. This means that 100% of their revenue is either used to fund their operations or invested back into their assets.

Based on their asset management and investment plans, Watercare are projecting an annual increase of 2.5% for Water charges and 3.3% for Waste Water charges over the course of the Long Term Plan, as signaled by their Statement of Intent and included in the LTP consultation document. Ultimately, the Board of WaterCare Limited are responsible for approving their charges but we are asking what you think? #akhaveyoursay

One of the headlines from this LTP consultation is the proposal to include a Water Quality Targeted Rate to improve the health of our harbours. That rate reflects the part of the work that the Council parent would have in resolving the issues but does not account for the total $856m cost of the work.The programme envisages that $404m of the total spend will be funded by Watercare Limited through their user charges. This is expenditure that Watercare had already factored in and isn’t directly driving their proposed increases.



Council’s debt figures are without a doubt, eye wateringly large – $9b in borrowings for the council group now and projected to rise to $12.6b by 2028. Price Waterhouse Coopers were asked to provide an independent opinion on Councils debt raising strategy. I quote from their written opinion presented to our  February Finance and Performance Committee which says  “We believe Councils funding strategy and use of off shore debt markets is a consistent, prudent and efficient means of satisfying the above underlying statutory objectives to future proof Councils ability to access long term funding and in ensuring liquidity capacity” So, whilst I appreciate that these numbers can be mind boggling initially, they do in fact represent prudent financial practice.

One also needs to understand is that Council only funds capital projects through debt and this means that the cost of the asset can be paid off over the lifetime of the asset. This helps to manage the cost of Auckland’s infrastructure across the generations that will benefit from it. The cost of debt (repayments/interest) is funded through operational expenditure, as is the depreciation of those assets.

Credit rating agency Standard & Poors, consistently gives Auckland Council an AA rating. This is very good, second only to central government and higher than any other Council in New Zealand. When calculating the rating, they also look at Auckland Council’s ability to service their debt. This means that they focus on the ratio between the revenue that Council receives and the debt level that it has. We are very aware of this as we are creeping up towards our limit. It’s important to ensure that we do not get too close as that would potentially downgrade our AA rating. A downgrade is a lose-lose situation for Council as the interest payments on our debt would increase significantly as a result of that.

Auckland is gaining nearly 50,000 people each year. On top of that, thanks to the unitary plan, adding new greenfield urban development 1.5x times the size of Hamilton over the next 30 years. Those figures challenge us to deliver on new infrastructure above and below the ground to meet that need as well as servicing that which we currently have.



I have written previously about the council’s staffing levels when the staff numbers were announced through the Council’s Annual Report last September.

That report had shown that more money had been spent on staffing across the council group than budgeted and while there were various reasons given for this, I raised concerns that budgets once set, should be adhered to. As a result, the Auckland Council CEO’s performance objectives now include ‘ensuring that the Council (parent) keeps to the salaries and wages budget.’ – watch this space ….

While staff numbers have historically increased, and this LTP draft budget is no different,  increase does occur against a backdrop of very significant population growth which puts pressure on Council’s services; particularly in areas such as Resource Consents where a busy construction industry may require additional Council staff resource to keep pace. Plotting the number of council staff against the population growth in Auckland shows that since 2014 the number of staff per 1000 Aucklanders has been reducing slightly each year for both the council parent and the wider council group.

Ultimately, the concern with Council staff numbers is one of concern that public money is being used to the best effect. The Value For Money programme (Section 17A Reviews) is a great vehicle to identify where and how council can improve its practice and use rates money to the best effect, whether it is by removal of duplication or through ensuring Council is up to international best practice standards across its many functions. The mayor last week officially asked me to work alongside him to ensure deliver value for money in everything we do. As you can appreciate this is huge job, but a challenge I am up for.

CCO Accountability


CCO’s are accountable to the Council, which agree the objectives and targets for each CCO and monitor their performance. The Council is required to have a policy on the accountability of its CCO’s and during this LTP we are looking at tightening up that policy. The policy includes expectations such as providing value for money, managing risk appropriately, building a group approach to achieve outcomes for Aucklanders and assisting to build trust and confidence in the Council group.

Do you agree these are common expectations that all CCO’s should meet?

And a final plug from me to you, your family, friends and neighbours to look and see how the suggestions will impact your rates bill, your community and Auckland.

Please take a few minutes to HAVE YOUR SAY at #akhaveyoursay

I’ll listen.