Our borrowings and assets
Auckland has to invest in and build infrastructure to support its large population growth, including:
- water and sewerage
- storm water drainage
- new transport facilities
- community services
- sports and recreational facilities.
We use debt to pay for building or purchasing of new assets and infrastructure that have a longer useful life. This allows the spread of costs over the generations who will use the assets, rather than fund from one generation of ratepayers.
It is prudent that we commit to long-term planning and provision for Auckland’s infrastructure needs now, to keep pace with growth and avoid pushing high levels of expenditure into the future.
Without the ability to use debt in this way, we would need to choose between significantly higher rates or a significant reduction in investment in critical areas of infrastructure need.
Our assets are growing faster than debt
The Auckland Council Group consists of Auckland Council and our council-controlled organisations (CCOs). The value of the Auckland Council Group's assets is growing at a much faster rate than our debt, as in
our last annual report 2015/2016.
The Group's debt is $7.6 billion against $44.6 billion in total assets, so our debt is 17 per cent of our total assets and our interest payments 11.2 per cent of our annual income.
Prudent borrowing ensures we operate well within our means and we monitor our borrowing level relative to our income and the value of our assets.
We continue to maintain strong credit ratings (an AA rating from Standard and Poor's and an Aa2 rating from Moody's Investor Services), confirming our strong debt servicing capability. This is one of the strongest ratings in New Zealand.
Our latest announcements on credit ratings are available at our
Alongside this, there are some important points to remember about debt.
- We use debt to fund our capital investment in long-term assets. The Auckland Council group raises enough revenue each year to pay for all of the essential services we deliver to Aucklanders. This figure was $3.7 billion in 2015/16, made up of approximately $1.56 billion from rates, with the balance from user charges, service fees, licenses and returns on investments.
- In 2015/2016, Auckland Council Group invested $1.4 billion in capital projects, including transport, water and wastewater infrastructure, and community facilities.
Our procurement strategy and policy
Procurement Strategy and Policy set out the process of deciding who the council should procure from, and when.