Tuesday, April 23, 2024

Council already at $38.1m of $50m savings target

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In June 2023, the Governing Body agreed to a mix of levers for the Annual Budget 2023/2024 to close the estimated $325m operating budget gap. Photo Jay Farnworth

Auckland Council has achieved $38.1 million towards the $50m operating savings target for the 2023/2024 financial year as of September 30.

This week, Auckland Council’s Revenue, Expenditure and Value Committee was provided with an update on the progress towards meeting the $50mn savings target for Auckland Council for 2023/2024 financial year.

This means that 76 per cent of the savings target has been met in the first quarter.

Councillor Maurice Williamson, Chair of the Revenue, Expenditure and Value Committee acknowledged the progress made while noting that there are still more savings to be found.

“It’s pleasing to see the significant progress in the first quarter towards implementing the specific annual budget decisions made in June this year,” says Williamson.

“While there’s a good pipeline of initiatives and programmes underway, there’s still more work to be done to achieve enduring savings and I am committed to working with this committee and staff to continue on this path and deliver for Aucklanders.”

Annual Budget 2023/2024 savings target

In June 2023, the Governing Body agreed to a mix of levers for the Annual Budget 2023/2024 to close the estimated $325m operating budget gap.

This mix of financial levers included rates increases, increasing fees and user charges, the sale of some of the council’s Auckland International Airport shares, modest use of additional debt and operating cost savings.

To fulfil the operating cost savings, the Annual Budget 2023/2024 included a total operating savings target for Auckland Council of $50m per year over the term of the 10-year Budget 2021-2031 period.

How has this been achieved?

In the first quarter the $38.1m of savings were achieved thanks to operating spending reductions of $23.4m implemented per the Annual Budget 2023/2024 as well as reductions of $14.7m under delegation to the chief executive.

“Overall, we are really pleased with the way progress towards our savings target is tracking,” says Nicola Mills, Auckland Council general manager, financial & business performance.

“While there are some risks, we are confident that we can find other savings in the financial year to meet our $50m savings target.

“We note that some of these savings are one-off, and we are working toward more permanent changes to achieve future years’ targets.”

Operating spending reductions (Annual Budget 2023/2024) – $23.4m

  • $4.7m of ongoing reductions and $1.8 million of one-off reductions from regional services
  • $4m of reductions to local board funding
  • $5m of maintenance optimisation and reduction in open space costs
  • $1.4m from changes to fees and charges
  • $1.5m from simplifying and limiting new strategies, savings realised through a combination of the organisational re-design change process and a comprehensive staff vacancy review
  • $0.5m from the consolidation of corporate office space across the Auckland Council Group
  • $2m one-off savings from FY24 amenities grants being agreed lower than the budgeted allowance.
  • $2.5m staff cost savings from lower annual remuneration increases compared to the budget.

Reductions under delegation to the chief executive – $14.7m

  • $6.9m permanent savings through organisational re-design.
  • $2m permanent savings from the service centres integration.
  • $0.8m permanent savings through the centralisation of software budgets.
  • $1.8m one-off saving of consequential operating expenditure (repairs and maintenance, utilities and other expenditure).
  • $2.4m one-off savings from staff cost budget not spent in the first quarter due to vacancies not filled
  • $0.8m one-off savings from elected member annual fees (set by the Independent Remuneration Authority) lower than the budget allowed.

This savings target is for Auckland Council as the parent organisation. There are separate savings targets for the council-controlled organisations.

Progress against the savings target is reported quarterly to the Governing Body as part of the Quarterly Performance Reporting. The next progress update will be provided to the Revenue, Expenditure and Value Committee after the council’s quarter two results are finalised.

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