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Budgets, spending and saving

Tahua pūtea, tōna whakapau me te tohu

​Our borrowings and assets

Auckland has to invest in and build infrastructure to support its large population growth, including:

  • roads
  • water and sewerage
  • storm water drainage
  • new transport facilities
  • libraries
  • community services
  • parks
  • 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

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 investor centre.

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

The Procurement Strategy and Policy set out the process of deciding who the council should procure from, and when.

IT costs

Our expenditure figures for IT covering the last five years have been released.

More staff were brought in during the last financial year to focus on NewCore, which explains operational costs of $39 million for that year. This is within the allocated budget given to Information Services (IS), the unit driving the NewCore project.

The aim of NewCore is to combine more than 3,500 computing systems inherited from the eight legacy councils. NewCore will be a coherent, single system which provides the best possible IT support for staff, and service to ratepayers.

While contributing to an increased overall IT budget, NewCore as a project remains within budget, scope and programme.

Our repairs and maintenance bill has also trended down significantly, from $3.9 million in 2012 to $270,000 so far this year. This is due to council moving away from 12 legacy data storage infrastructure services to just one, outsourced over 2013/14 and now managed through operating leases with Spark. This explains the increase in operating lease costs, to $15 million in 2015.

Continued streamlining of legacy contracts, for services such as telecommunications, has seen costs trend downwards since 2013.

More information about IT costs can be found on Our Auckland.

​Communication and engagement expenditure

On an annual basis we will publish details of our spend on communication and engagement activities.

 Below is the original report for Auckland Council (excluding council-controlled organisations).

​The report will be updated at the conclusion of each financial year.

​Travel expenses

The figures below show how much we spend on domestic and international travel.

The figures do not include spending by council-controlled organisations.

All travel undergoes an approval process which, in cases of overseas travel especially, involves a business case as part of the request for approval.

​Financial Year​International Travel Spend​Domestic Travel Spend
​2014/15 ​$660,382​$1,659,110
​2015/16​$457,379 $1,552,046
​2016/17​$497,000​$1,449,000

Average annual rates increases (2010 to 2017)

Under the former Auckland councils, the average annual rate increase across Auckland for the eight years before the establishment of Auckland Council was 5.7 per cent.

In 2010 we inherited a rates increase from the eight former councils of more than 9 per cent in 2010/2011, followed by a proposed average annual rates increase of 6 per cent per annum thereafter.

In its first rating year, we set rates significantly below this with a 3.9 per cent annual average rates increase in the 2011/2012 year. Rates then decreased every year to 2.5 per cent for 2014/2015, among the lowest annual average rates increases in the country for that year.

Average annual rates increases since 2010 have been:

  • 3.9 per cent in 2011/2012
  • 3.6 per cent in 2012/2013
  • 2.9 per cent in 2013/2014
  • 2.5 per cent in 2014/2015
  • 2.6 per cent in 2016/2017.

Efficiency savings

In an environment where we cannot afford to do everything at once, it is essential we ensure that every dollar we do spend provides value for money.

Each year we set a target for efficiency savings, which are savings on the cost of delivering services, or in other words - delivering the same or more for less money.

We are always looking for innovative ways of achieving better outcomes for less money with a continued focus on better use of technology and smarter processes. Some of the ways in which we achieve savings are:

  • simplifying and improving our business processes
  • better procurement and tendering processes
  • bringing more work in-house to reduce the cost of external providers
  • reducing the number of office buildings we occupy.

Our efficiency savings are cumulative and are calculated compared to the baseline cost of delivering services in the starting point budgets for Auckland Council prepared by the Auckland Transition Agency in 2010.

For example, in the 2015/2016 year we made a total efficiency savings of $224 million which includes a $41 million increase on the previous year. A target of $19 million in additional savings has been set for the 2016/2017 financial year (FY).

The Long-term Plan 2015-2025 (10-year budget) identifies a total efficiency savings of $309 million a year by 2024/2025.

​Financial Year (FY) ​Additional Efficiency Savings By Financial Year ​Total Efficiency Savings By Financial Year
​FY 2011 / 2012​$81m ​$81m
​FY 2012 / 2013 ​$50m ​$131m
​FY 2013 / 2014 ​$14m ​$145m 
​FY 2014 / 2015 $38m ​​$183m
​FY 2015 / 2016​$41m ​$224m
​FY 2016 / 2017​ $28.8m​$252.8m

Survey and polling research expenditure

On an annual basis we publish details of our spend on survey and polling research.

We undertake market and social research activity to help inform and define the strategies, plans and services that deliver on the vision for Auckland and the Auckland Plan.

The document below outlines the costs of survey and polling activities from FY11-FY15, and costs associated with the People’s Panel.

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