Auckland Council airport shares: Mayor’s stance ‘at variance with facts’ - councillor

Mike Lee says Wayne Brown’s reasoning for wanting to sell airport shares, worth $1.91 billion, is “at variance with the facts”. Photo / File

One Auckland councillor says Mayor Wayne Brown’s reasoning for wanting to sell airport shares, worth $1.91 billion, is “at variance with the facts”.

Brown yesterday penned an open letter outlining his belief the council must sell its shares in Auckland International Airport Limited (AIAL) to avoid higher rates rises and more budget cuts.

Public submissions on Auckland Council’s draft budget closed on Tuesday night. The budget proposed service cuts, fee increases, axing public events and boosting disaster response funding.

In his letter, published as an op-ed in the Herald, Brown said owning shares, which he said cost the council $240 million in interest payments over the three years and didn’t return a dividend, was “just stupid”.

Mayor Wayne Brown yesterday penned an open letter outlining his belief the Auckland Council must sell its shares in Auckland International Airport Limited (AIAL) to avoid higher rates rises and more budget cuts. Photo / Michael Craig

“So why do some councillors not get this? The airport returns have never met the costs of owning the shares and never will, so it is a lousy investment for debt-burdened rate-payers,” he said.

But councillor Mike Lee said Brown’s “describing [of] airport shares as a ‘lousy investment’ is an extraordinary statement at variance with the facts”.

‘I respectfully disagree with the mayor on this matter,” he said.

Lee said airport shares were income-earning assets gifted to the Auckland Council by legacy city councils, Auckland and Manukau City.

“And [it] cost the Auckland Council nothing,” he said.

The council’s shareholding in AIAL had returned a net $1.2b in the 11 years since June 30, 2011, Lee told the Herald.

Councillor Mike Lee said Brown’s “describing [of] airport shares as a ‘lousy investment’ is an extraordinary statement at variance with the facts”. Photo / Michael Craig

“This is comprised of $1.3b of capital gains, $344m of dividends, less $407m of interest costs.

“This return has been consistent over time, with eight of the previous 11 years providing a positive return after interest costs. Out of the remaining three years, two of them are impacted by Covid,” Lee said.

Brown said investment in the airport was better suited to long-term shareholders such as pension funds rather than the council, for whom “costs it must meet costs out with rates and debt to balance things”.

Deputy Mayor Desley Simpson agreed with Brown’s suggestion that owning shares in the airport was not beneficial for Aucklanders.

She believed selling shares in AIAL to keep rates rises low and avoid service cuts was sensible.

Simpson said she would think twice about her decision if AIAL was more profitable and returned a dividend to the council.

Deputy Mayor Desley Simpson agreed with Wayne Brown’s suggestion owning shares in the airport was not beneficial for Aucklanders. Photo / Jason Oxenham.

“If I thought I was taking away something that would bring in long-term benefits, you know I might be a bit more cautious. But it has to be a huge return, and it’s never been that big for it to break even, let alone be profitable,” Simpson said.

She said she wanted to protect services from being cut and selling airport shares was the only option.

“We already know inflation is doing its thing, we’ve got cost of living problems out there for people, so, you know, this is not the time for a gigantic rate rise or more debt,” she said.

“I don’t know what the results [of consultation] are, but the people I’ve spoken to don’t like this budget by way of some of the things that the savings want to cut, and yet, if you’re going to try and help save some of those things, you need to pull another lever some other way.

“We’ve only really got four big [financial] levers. We’ve got rates, debt, assets like the [airport] shares, and savings from service cuts,” Simpson said.

Several councillors criticised Brown for having a “predetermined” position on selling the shares without first considering public submissions on the proposal yesterday.

Councillor Chris Darby said, “while it appears the mayor has predetermined his position on the merit of the council’s $2.35b stake in the Auckland Airport monopoly, I haven’t." Photo / Dean Purcell

“While it appears the mayor has predetermined his position on the merit of the council’s $2.35b stake in the Auckland Airport monopoly, I haven’t,” councillor Chris Darby said.

“I won’t be ignoring those [submitters’] views and jumping to ill-informed conclusions. I will be giving due weight to the analysis of this remarkable public response, including their views on airport shares,” he said.

Darby was joined by councillor Alf Filipaina, who said the council was supposed to consider residents’ views before making a decision.

“He [Brown] has put his view in already. After consultation, we’re supposed to be listening to everybody. But he’s stated his position already.

“That’s a bit of a shame. All of us are supposed to have open minds,” Filipaina said,

“I am on the record saying I don’t support selling the shares, but at least I’m going to consider those [submissions] before I end up making any call around where my stance will be.”

Brown said: “Failure to sell the airport shares will force a hard rate rise and hard cuts everywhere, which as mayor, I certainly don’t want.

“Some [councillors] are suggesting debt increases as a way out, but . . . that is foolish, especially now when interest rates are heading up,” he said, citing City Rail Link cost blowouts and storm damage.