Wellington International Airport during the Covid-19 lockdown. Photo / Mark Mitchell
Wellington International Airport during the Covid-19 lockdown. Photo / Mark Mitchell
OPINION:
Wellington City Council is at risk of being torn apart over the airport as it stretches between being a regulator, a shareholder and a political voice.
The council owns 34 per cent of Wellington International Airport and the mayor is on the board.
Therefore, the council has a financialinterest in how the airport performs and Andy Foster has an obligation to act in the best interests of the company in his capacity as a director.
The airport could be considered a good investment before Covid-19 hit, with total dividends paid to the council amounting to $120 million over 10 years.
But airport returns have been relatively volatile in recent years. The council has not received dividends and agreed to underwrite the airport to the tune of $25m.
Regardless of the airport's own initiatives to reduce emissions, many councillors feel supporting the expansion is at odds with the council's position on climate change.
The political voice they have at the table, Foster, frequently has to consider whether he has a conflict of interest. He is also the only airport board member to have missed meetings as he juggles a full schedule of council meetings too.
The council is in a weak position as both a shareholder and as the council because it cannot fully exercise power in either setting.
It's the minority shareholder, with Infratil owning the remaining 66 per cent, so it can't really pack a punch. It also has to be mindful of positions it takes as the council because it is a shareholder.
Prime Minister Jenny Shipley. Photo / Martin Sykes
The council found itself in this position in 1998 when then Prime Minister Jenny Shipley decided to sell the Crown's 66 per cent shareholding in the airport. The council decided to keep its 34 per cent.
Shipley said at the time the airport had not been a positive asset for the capital city, due to an unwillingness of former shareholders to invest public money in areas like runway or terminal development.
Asset sales are a recipe for controversy. This one resulted in Winston Peters being dismissed from his ministerial responsibilities as Deputy Prime Minister and Treasurer.
Shipley said Peters refused to accept Cabinet collective responsibility and had publicly criticised government policy regarding the airport sale.
Such sales remain controversial around the council table today. In fact, the more left-leaning councillors who are opposed to the airport's expansion are also vehemently opposed to asset sales.
Councillor Iona Pannett summed up the predicament eloquently when she and her colleagues considered whether to consult the public on selling the airport last year.
She described the airport as a "dirty asset" in terms of climate change, but on the other hand she was also a strong opponent of asset sales.
This tension is exacerbated when the council's role as a regulator is added into the mix.
This was exemplified by a recent notice of motion, brought by Pannett, for the council to oppose the airport's expansion unless it reduced carbon emissions, improved air quality, reduced air traffic noise and reduced the use of private vehicles to and from the airport.
The airport argued it was actually doing all of this already.
Wellington City councillor Iona Pannett. Photo / Mark Mitchell
This threw a spanner in the works because there are live Environment Court proceedings going on, in which the council is party to in its role as a regulator.
Local lobby group Guardians of the Bays has lodged an appeal against the airport, after it got initial approval to turn a green space to the east of the building into tarmac.
A panel of independent commissioners appointed by the council made the recommendation for this approval.
Council officials warned the notice of motion could be unlawful and would be seeking to override a regulatory decision, despite councillors not necessarily having the level of specialist expertise to do so.
The motion ended up being voted down, with some councillors clearly uncomfortable this position would be taken as their personal support of the airport's expansion.
Something's got to give. Councillors should think about where they can flex their muscle and have the strongest voice.
It's not like Infratil is about to sell some of its shares to the council and move the balance of power. Even if it did, which to be clear, it wouldn't, the cash-strapped council would struggle to find the money to buy them anyway.
Wellington City Council should reconsider selling its share of the airport.
• Senior Wellington journalist Georgina Campbell's fortnightly column looks closely at issues in the capital.
