Auckland Mayor Wayne Brown has thrown all his stakes into selling Auckland Council's 18 per cent shareholding in Auckland Airport. Photo / Michael Craig
Auckland Mayor Wayne Brown has thrown all his stakes into selling Auckland Council's 18 per cent shareholding in Auckland Airport. Photo / Michael Craig
EDITORIAL
After some of the more lively debate seen in local government for years, Auckland Council will vote on the proposed sale of an 18 per cent shareholding in Auckland International Airport tomorrow.
A record 41,146 submissions reflect the interest.
One of the worst things councillors could do this weekis to vote with their hearts. Ideologies of public ownership and privatisation are moot, the airport has already been privatised. This is a case of how best to manage limited council resources.
Mayor Wayne Brown says the council’s ownership of the shares - worth about $2.2 billion - is entirely funded by debt. This means the council pays $100m in interest repayments while receiving a smaller return back, forecast this year to be $42m. He says divestment is not “selling the family silver”, it didn’t give the council influence or control over the operation of the airport. All this, he says, makes the shares “technically a poor performing investment”.
The council stake, at less than 20 per cent, could not prevent a takeover. However, that could be prevented by the Overseas Investment Office or another government agency whether Auckland Council held its shares or not.
Illustration / Daron Parton
While the proposal should come down to financial calculations, there are some fundamental questions. Should Auckland Council be holding investments at all? Are there better investments?
On the other side of the debate, would Auckland Council be better paring off some of its holdings in the Ports of Auckland Limited? Or why not sell 9 per cent of its airport shares and use that $1 billion to retire some debt while still maintaining services?
Auckland Airport is a good asset, with improving prospects as we emerge from the pandemic but faces raising further capital as part of an estimated $3.9b construction of an integrated domestic and international terminal over the next five to six years. The necessary raising of capital will further dilute Auckland Council’s current shareholding.
Brown has put all his eggs in one kete by declaring the sale his bottom line. It is clear he believes in his heart and mind that this is the best approach and has staked his political reputation on its passing.
As senior Herald writer Simon Wilson pointed out yesterday, it’s unusual for a mayor to take a vote on a budget while knowing it does not have enough support. It appears the council vote will fall short by a split of 9-12. However, a changed vote, an abstention, and/or an absent councillor and the motion could go to a casting vote from the mayor.
Much horse-trading and calling-in-favours will be going on in the countdown to the vote. The councilors will convene tomorrow to consider item nine on the agenda with the first recommendation to “agree to amend its current long-term plan (the 10-year Budget 2021-2031) to provide for a full sell-down of the council’s shareholding in Auckland Airport Limited and adopt the long-term plan”.
Councillors should not need reminding they must do what is right for the ratepayers and the city.
