Think smart to finance big plans, says Govt

Auckland International Airport. Photo / Supplied

The Government says the Auckland Council should follow its new focus in asking its agencies to get better value from its commercial assets.

Its position paper on the Auckland (Spatial) Plan calls it an opportunity to use smarter funding tools to support the plan's big spending objectives.

The paper says evidence of the Government's new focus is the recent decision to explore mixed-ownership for four state-owned enterprises and reducing the Government's shareholding in Air New Zealand.

"Ideally the Auckland Council would not preclude a similar undertaking from its overall funding and financial strategy, as a way of potentially reallocating resources towards the achievement of the spatial plan's objectives."

The Auckland Council had a strong asset base of $32.4 billion, a relatively modest debt of $3 billion and significant operating expenditure of $1.8 billion a year.

A council-controlled organisation has been formed to hold and manage the council's big investment assets, particularly Ports of Auckland and Auckland Airport.

The assets managed are worth $1.195 billion and expected to return a dividend to Auckland Council of $25 million in the next financial year.

"This represents an approximate 2.8 per cent dividend yield."

The council expected to get 62.8 per cent of funding from rates, 13.1 per cent from fees and charges and 6.8 per cent from developers' levies.

Pressure from ratepayers and the council's "aspirational spending programme" signalled by the mayor in capital investment, including the CBD rail loop, airport rail link, and waterfront development meant the council faced difficult decisions including how it managed capital assets and paid for the spending.

The council wants to reduce its borrowing cost and reduce refinancing risks.

It is asking the Government to change the law this year so that it can borrow in foreign currencies.