Submission to Auckland Council 10-Year Budget 2021/2031

Heart of the City's submission to Auckland Council's 10-Year Budget 2021/2031: submitted 22 March 2021.

Heart of the City is the business association for Auckland’s city centre. We represent the interests of businesses and property owners in the city centre. 

Key points of our submission

• The city centre has experienced a significant shock due to the impacts of COVID-19 and long-term, large-scale construction and more needs to be done to ensure it remains vibrant and successful, commensurate with its role in Auckland’s economy.
• Overall, we are supportive of capital investment to support anticipated growth over the period of this 10 year budget.
• However, given the significant impact to businesses from COVID-19 we would like to see rates increases kept to a minimum to support business recovery. We would prefer to see increased borrowing in the short term (within acceptable levels), deeper organisational cost savings and a transparent and strategic approach to selling assets/property.
• Auckland Council must transform to become efficient and “customer” focused across its wider group of organisations. 
• Heart of the City is supportive of the City Centre Targeted Rate. However, Council must demonstrate greater transparency and respect for businesses that pay the City Centre Targeted Rate. We must also see change in how transformation and change is undertaken in the city centre.  Planning must be holistic and integrated, and innovation is essential to underpin change.
• Auckland Council must also not lose sight of the bigger issues that must be addressed through the period of this 10-year budget, such as ensuring there is a vision for the land occupied by the port, as well as ensuring there is appropriate funding in place to enable the implementation of Access for Everyone (A4E) on completion and agreement of a sound business case. This may require a review of the priorities and timing for city centre investment in the coming years.   
• Auckland Council must also demonstrate its support for economic recovery and the utilisation and optimisation of prior investment in the city centre by ensuring there are initiatives to bring people back to the city centre - including the return of its workforce and free public transport initiatives to use capacity and encourage visitation - and appropriate levels of spending for maintenance and cleaning.
• Effective mitigation of the impacts of construction and support for those impacted by large-scale, long-term construction – with funding allocated to each project - is essential. 
• We maintain that the Accommodation Provider Targeted Rate is an inappropriate mechanism and do not support its reinstatement.
• We must ensure we maintain a vibrant major event offering and continue to market Auckland to the rest of New Zealand and Australia, and the rest of the world, when appropriate. We do not accept that this activity is tied to the collection of the APTR, and we believe that Auckland Council must seek more funding from central government to support this activity.
• We are supportive of the proposal to procure only electric or hydrogen buses from July 2021 as this is a key initiative to address air quality issues in the city centre.
• We also believe the ongoing significance of the impacts on businesses necessitate Council considering extending measures such as the rates postponement for ratepayers impacted by COVID-19, and introducing new measures, such as relief in paying hospitality-related fees and charges (e.g. outdoor dining licence fees).

Background

Our submission will cover:

1. Impact of COVID-19 and City Centre transformation
2. Proposed ten-year budget and city centre priorities 
3. Rating policy proposals, including the Accommodation Provider Targeted Rate
4. City Centre Targeted Rate (CCTR)
5. Regional Fuel Tax
6. Climate Change
7. Homelessness
8. Other

1. The impact of COVID-19 and City Centre Transformation

The city centre has experienced a massive shock from COVID-19. Impacted businesses, which employ people from all over the city, have lost half a billion dollars of consumer spending over the last year plus all the costs associated with things like shutting down at short notice and the stress of worrying about what will happen to their livelihood, their staff and paying their suppliers – who also come from across the city. 

On top of that, spending in the city centre was already trending down before COVID-19, challenged by ongoing impacts from long-term, large-scale construction.

While Heart of the City is optimistic about the city centre’s future, and recently we have seen some positive trends in domestic spending and the benefit of major events such as America’s Cup (and we expect to be able to capitalise off opportunities that may come from an Australian bubble), we are under no illusion about the severity of impact in the short to medium term. 

Two periods of Level 3 in quick succession have exacerbated the situation for many. 

Auckland Council must do more. There must be a material change in how Council respects and considers business needs. There must be effective mitigation of the impacts of construction and support for those impacted by large-scale, long-term construction, as well as other measures to support the city centre’s economic recovery, such as leading the way by returning Council’s workforce.  

Auckland Council must take action to ensure the city centre remains a vibrant and successful place, and that businesses here are supported. The Recovery Budget 2021-2031 needs to reflect that.

2. Proposed 10 Year Budget & City Centre priorities

Overall, we support the need to continue with Council’s capital investment of $31 billion over the next 10 years and recognise that Council is projected to have its revenue impacted by around $1 billion as a result of COVID-19. However, we do not agree with the proposed one-off 5 per cent average general rates increase for 2021/2022.

In the current environment we believe that rate increases should only be used if absolutely essential to fund activities that will help economic stimulation and recovery once all other avenues have been exhausted.

Instead, we believe Council should:

• keep any rates increase to a minimum for 2021/2022;
• make deeper cost savings and prioritise spending;
• increase Council borrowing in the short-term if necessary, up to an acceptable maximum; and
• sell appropriate assets/property within a transparent and strategic framework.

We note the positive statements made in Council’s half year financial results and upgrade in the Council’s debt rating, indicating a more optimistic outlook is warranted. We suggest this allows Council to further increase borrowing in the short term.

City Centre priorities

We note that for the first three-year period of this plan there are no additional projects identified for the city centre other than what is already identified in the City Centre Targeted Rate programme, and other major projects such as the City Rail Link.

One of the significant projects underway for the City Centre is the development of the Access for Everyone (A4E) Business Case. Whilst we note that there is funding identified for A4E as part of the Auckland Transport Alignment Project 2021-2031 and we are anticipating funding to be allocated in the draft Regional Land Transport Plan (RLTP), additional funding may need to be allocated to realise the vision set out for A4E.

Given this, HOTC would like to ensure that appropriate funding is put in place to enable the implementation of Access for Everyone (A4E) on completion and agreement of a sound business case. This may require a review of the overall priorities and timing for city centre investment in the coming years, including the current City Centre Targeted Rate (CCTR) capital programme. The Auckland City Centre Advisory Board (ACCAB) will be instrumental in this review.

Auckland Council must also not lose sight of the bigger issues that must be addressed through the period of this 10-year budget. This includes determining the future use of the Port land, with an agreed masterplan that is integrated into the wider vision for the Waterfront, and confirming the direction of the regionally significant Headland Park in Wynyard Quarter.

3. Rating Policy proposals

Our overall feedback is that what businesses need most from Council is a fair, transparent, and stable approach to rates.

We also believe the ongoing significance of the impacts on businesses and the regional economy necessitate Council to consider extending measures such as the rates postponement for ratepayers impacted by COVID-19 and introducing new measures, such as relief in paying hospitality-related fees and charges (for example, outdoor dining licence fees).

Business differential

While we appreciate that the business differential is being reduced through the Recovery Budget 2021/2031, fundamentally, we do not accept that a business differential should be applied to rates.  This is particularly relevant for small businesses who make up most businesses in Auckland. Of which many of whom are already facing immense financial pressure as a result of COVID-19 as we have already highlighted.

Accommodation Provider Targeted Rate (APTR)

We maintain that the Accommodation Provider Targeted Rate (APTR) must go and not reappear. The Accommodation sector has strongly represented this position to Council since the fund was first conceived and has proposed alternative options for funding (for example, Tourism Industry Aotearoa’s presentation to the Finance and Performance Committee’s 10-year budget 2021-2031 Regional Stakeholders Have Your Say Event).

We believe in the importance of holding major events in our city, as well as marketing Auckland to the rest of New Zealand, Australia, and when the time is right to the rest of the world.   These activities must continue, without being tied to this rate.  We would like to see central government acknowledge the value that Auckland brings to the wider economy.

Watercare’s increase in charges

We are concerned that the substantial increases in water charges proposed by Watercare have not been highlighted in the Recovery Budget 2021/2031. We question whether these substantial increases in water charges are reasonable at a time when many businesses are struggling to survive.

4. City Centre Targeted Rate (CCTR) extension

Heart of the City is supportive of the City Centre Targeted Rate. However, Council must demonstrate greater transparency and respect for businesses that pay the City Centre Targeted Rate. In order to support the rate’s extension we must see:

• Holistic and connected planning across the Council group to design and deliver the City Centre Master Plan.  This is necessary to ensure place, movement and operational needs are met optimally.  Too often, this balance has been missing and projects need rework which costs time and money. 
• Effective timing and sequencing of projects to ensure the city centre is attractive and accessible while it is being transformed. 
• Scheduled works are cost-effective and efficient, with a “do it once, do it fast, do it right” approach.  We receive constant feedback that people view Council projects to be expensive, slow and inefficient.
• New spaces must be maintained and looked after – ongoing management, maintenance and activation is vital to success.
• Innovation in how the city operates, for example in servicing and loading to underpin aspirations for the place – businesses need to get stock.

5. Regional Fuel Tax underspend

Our preference is to introduce initiatives that both manage demand and raise funding equitably as soon as possible, balanced with investment into affordable and more frequent public transport in order to effect sustainable behavioural change.

While we have previously supported a regional fuel tax of 10 cents per litre (plus GST), we ask for greater transparency regarding the spending of this tax on specific transport projects and services. We wish to avoid the regional fuel tax, which is the equivalent of a significant rates increase (especially for transport operators), being used as a ‘top up’ for overall transport budgets.

We note the ongoing underspend of the Regional Fuel Tax. We are concerned that:

• the RFT is being under-spent
• businesses are being over-taxed
• infrastructure is not being built at the required pace.

6. Climate Change     

HOTC is supportive of investment to meet climate change goals.  In particular, we support funding that will ensure all new buses procured from 1 July 2021 will only be electric or hydrogen - this will go some way in addressing air quality issues.  

We welcome initiatives that support and incentivise business to make the necessary changes. Funding for business education is particularly important to raise awareness and drive change.  

7. Addressing homelessness

HOTC supports investment into supporting homeless initiatives in Auckland.  However, we would like stronger performance measures for what Council’s contribution is intended to achieve and believe that overall, the responsibility for addressing this issue primarily sits with central government.

8. Other

Auckland Council must not forget the importance of ensuring a clean and safe city centre. To ensure this, service levels must reflect the quality and level of capital investment. We too often see new public spaces compromised by poor levels of maintenance and cleaning, as well as lack of enforcement which ends up seeing beautiful spaces degraded over time.

Auckland Council’s ongoing commitment to the CityWatch programme, which HOTC co-funds, is important.  However, more is required to support a safe city centre environment as the city centre has seen an increase in crime and anti-social behaviour since COVID-19 struck.

Conclusion

Impacted businesses are facing cumulative impacts over a long period of time, and for some it goes well beyond COVID-19.  All the public and private investment in the city centre, including public transport, is reliant on people. Whilst we have confidence in the future of the city centre, the short to medium term issues are significant and we are looking for a major change in approach from Council.  We want to see a more efficient organisation that utilises ratepayer funds well and one that cares not only about creating spaces for people, but also about the people who work hard, day in and day out to contribute to our city centre and economy.