Just as most industries in New Zealand are firing thousands of people to cut costs, local government is getting ready to do the same.
It’s not unusual to consider Councils as stable objects that can be relied upon when times are tough. But what they are doing is cutting back, firing people, cutting projects, cutting whole businesses, but trying to be helpful ,and trying to stay coherent to their citizens struggling to hang in there.
Most every Council now has a recovery or revitalisation plan. Here’s Hamilton’s example.
But at the budget level choices are so tough as to be cruel.
Our Councils collectively employs multiple tens of thousands of people, with a huge economic footprint both directly through rates and services, and through those who have holding companies, and also through their massive networks of suppliers they purchase goods and services from.
Auckland Council has just put out its “Emergency Budget” proposal.
They have had a substantial reduction in non-rates revenue caused by the recession. As the Mayor notes, “already many temp or contracted staff have been given notice.” At the same time, “Aucklanders will also want us to partner with the government to invest in the construction that the city needs, and will contribute a stimulus to growth and jobs to assist our recover.” So they’re going for a 2.5% rate increase.
To make matters worse Aucklanders are in such a water deficit that they are about to impose serious region-wide restrictions. The industrial users will be getting the hard word.
The budget implications don’t appear to have hit Tauranga Council yet. They will.
Hamilton Council is enabling community groups to apply for three months free rent.
But the big budget debate hasn’t arrived, and is being postponed until they can make sense of it.
Kapiti Council is seeking to hold rates increases at 2.6%, and is figuring if it went any lower it would really have to cut core services hard.
Wellington Council is in really serious trouble. It is so dysfunctional that the Mayor has brought in a mediator to work with the entire Council. The Mayor proposed an emergency budget yesterday, but didn’t get a majority.
But Wellington Council has internal stakeholders that know how to successfully apply the pressure – so Wellington Airport got the underwrite they needed despite Infratil its minority owner still having bulkloads of liquidity. The pressure will soon be on Wellington Council to sell out for needed cash for its wastewater disasters.
Christchurch Council gets quite a lot of income from its holding company, Christchurch City Holdings, but it’s in for a real squeeze as its airport income and port income are chopped to barely a fraction of expected. Time to empty out those cash reserves just to keep things going as they are.
Big shoutout to Mayor Dalziell for leading a relief measure that will provide a rent holiday of up to three months from May 1 to its tenants including cafes, childcare facilities, and sports clubs. They will not have to pay the money back. That’s a pretty big impact to its 1,600 tenants.
Dunedin – being one of New Zealand’s last and loveliest citywide corporations through its holding company – has just had to lay off hundreds in its stadium and events business, stopped its rail business, and that’s before it even starts in earnest on its budget.
You can almost bet that Dunedin Airport will need a bailout as well.
Half the motels across the wider Dunedin region are empty and facing ruin.
Further into the South Island, Mayor Boult of Queenstown Lakes said that the local economy there is likely to shrink by 40%, the unemployment rate there is going to climb to 25-30% of the working population, and its great breadwinner airport is still unable to furnish a Statement of Intent so that they can be adequately held to account.
It’s hit Invercargill Council revenue hard as well. They are proposing a special rates postponement. The kicker will be whether the multi-block redevelopment of Invercargill town centre continues: the stimulus v debt v rates v optics conundrum.
Even at a city level, it’s clear that our Councils as a whole have very little capacity to act as economic or social shock absorbers to the scale of crisis hitting this country. Overall they are just starting to feel the upheaval that other industries are facing.
This crisis is hitting deep into the public sector of every region, and it’s only starting.
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