Auckland Mayor Wayne Brown wants to sell the Port of Auckland’s operating business by way of a long-term lease and put the proceeds into a new $3 billion-to-$4b investment fund.
The two proposals are key planks of Brown’s 10-year budget, along with cost-cutting measures to take the sharp edges off an earlier projection from officers for a 14 per cent rates rise next year.
Brown will propose a rates rise of 7.5 per cent for households when he releases his Mayoral Proposal next week - the first step in a lengthy process of developing the 10-year budget, otherwise known as the Long Term Plan (LTP).
This will be followed by a rates increase of 3.5 per cent in 2025, 8 per cent in 2026 for a one-off hit from the City Rail Link, and about 3 per cent thereafter.
“The chickens are coming home to roost. The running costs of the City Rail Link alone are expected to account for about 10 per cent of rates paid by Aucklanders in the third year of the Long Term Plan,” Brown said earlier this week.
The operating business of Port of Auckland could be put on the block. Photo / Michael Craig
The mayor is putting forward two options for the council-owned port. Keeping the port business with the gradual release of some land for public use, or selling a 35-year lease to operate the business which could raise between $2b and $3b.
Under both options, the prime waterfront land would remain in public ownership.
Brown’s preference is to sell the operating lease and put the proceeds into an “Auckland Future Fund” that will invest in diversified assets along the lines of the NZ Super Fund.
The fund will be managed by a trust and include the council’s remaining $1.3b share portfolio in Auckland Airport and possibly the $833 million of proceeds from the partial sale of council shares in the airport this year.
The fund managers would be able to sell down some or all of the remaining Auckland Airport shares to diversify the fund’s portfolio without the approval of the council.
Brown said the fund would help address and mitigate the council’s long-term financial and physical risks posed by climate change, protect the value of assets for future generations, and achieve strong and sustainable financial returns.
He envisages a return of at least 7.5 per cent a year, or about $180m, to minimise the impact of rate increases, and said earmarking $1b of the fund to insure council assets will save $25m a year.
After coming to office last year, Brown picked up secret work on selling the port’s operating business started under former mayor Phil Goff and endorsed by the left-leaning council.
Auckland Mayor Wayne Brown is keen to sell Port of Auckland's business and keep the land in public ownership. Photo / Michael Craig
It’s an open secret that DP World, based in Dubai and which operates terminals in 40 countries, made an unsolicited offer to the council in early 2021 to buy the port outright or the “opco/propco” model for a long-term lease to operate the business with the land remaining in public ownership.
At the time, the council hired Melbourne-based consultants Flagstaff Partners to look at options for a possible sale. Flagstaff was also hired by the council to provide advice on this year’s sale of airport shares.
The sale of the port business is strongly opposed by the Maritime Union and it is unclear if Brown has the numbers around the council table at this stage to sell the business.
DP World is not saying anything about its interest in the port and the Herald understands Port of Singapore, Patrick Terminals in Australia, and another big international player, Terminal Investments Ltd, are also keeping an eye on a possible sale.
Bernard Orsman is an Auckland-based reporter who has been covering local government and transport since 1998. He joined the Herald in 1990 and worked in the parliamentary press gallery for six years.
