Brian Rudman: Leaders playing hardball over port project costs

Fresh from his "rev up the Government" campaign over Auckland roading, Employers and Manufacturers Association (Northern) chief executive Alasdair Thompson is now focused on revving up Auckland City councillors to sell the city's gold-plated Auckland International Airport shares.

Why? Because councils, "as a matter of principle, should invest their ratepayers' capital in things like the waterfront development rather than airport shares".

Prior to the port company's return to full public ownership this year, I supported such a move, though not as a point of principle but of commonsense. But the reasoning behind Mr Thompson's new campaign espouses a principle I've never before seen unveiled in public policy debates.

He argues: "There is so much private capital looking for shares to invest in that the likes of airports have no trouble attracting private capital investment. There is absolutely no need for councils' (ratepayers) funds to be tied up in such as Auckland Airport Ltd.

"On the other hand, there are few private investors looking to invest $200 million in the likes of the proposed waterfront development."

He asks: "Which is more appropriate - investment in public amenities which the private sector lacks an appetite to invest in, or to invest in airport shares which the private sector has an almost insatiable appetite for investment?"

Sometimes, it seems, the public sector can't win. Instead of praise from the business community for doing the capitalist investing thing so well, it's being criticised for not selling up and investing in a chancy investment that no one else wants to touch with a barge pole.

I was intrigued, though, as to why he thought Auckland City needed to contribute $200 million to the proposed waterfront development.

With the port company, which owns most of the development land involved, now 100 per cent domiciled within the Auckland Regional Council family, I had assumed the grandiose redevelopment plans recently showcased would be funded from within this family. Silly me.

Behind the scenes there's a tussle brewing between Auckland City and the regional family - comprising the ARC, Auckland Regional Holdings and Ports of Auckland.

Details are sketchy, but as I understand it the region is refusing to fund its own vision. It wants Auckland City, as the territorial authority, to contribute half the development costs - nominally $350 million - to cover public-good elements such as parks, while the other half of the costs will come from development levies imposed on the new apartments and office blocks and so forth.

The port company will remain solely as the landlord, leaving the development to others.

The regional family is asking to be treated no differently from any other developer, neither asking for nor volunteering any favours.

It says it will support a 7.5 per cent development levy for the area, which is much more generous than the current neighbourhood going rate of under 2 per cent. As far as parkland is concerned, the regional council is arguing that providing parkland as a "regional park" would "not fit the criteria".

Auckland City has apparently responded by asking for a "betterment" levy on any development, which would give the city a share of "the value uplift" resulting from any rezoning by the city of the area.

The regional family is defending its hardnosed attitude by arguing that Auckland City will benefit hugely in future years from the increased rating based created.

All of which is rather predictable, if dispiriting. Many of us supported the return of Ports of Auckland to full public ownership in order to guarantee the planned and orderly redevelopment of the city's priceless front door. It's also the whole region's front door, and for that matter the whole country's.

I had hoped the regional council would honour its social and cultural obligations outlined in the Local Government Act, and take full ownership of this redevelopment.

But unfortunately, ARC councillors are obsessed with roads and sewers and seem set to milk the port company for this agenda alone.

What they ignore is that every penny raised by local government in Auckland could go into roads and sewers and it still wouldn't be enough.

What the ARC needs to do is relax a little and come up with a way for a redevelopment plan that funds itself.

We're talking of a project spreading well over 20 years, so over time we're only talking a kilometre or two less roading a year.

Is that really worth going into battle with Auckland City ratepayers over?