John Roughan: Yacht harbour is no business of a public body

COMMENT

Whatever has possessed John Banks? He came to the Auckland mayoralty with a hiss at the city's extravagance and a roar for more roads. Immediately he commissioned Bill Birch to sort out essential expenses from the needless, and started plans for a long-overdue artery through the eastern suburbs.

Now, two years on, he is suggesting that the city council buys Westhaven Marina among other things. And his eastern highway comes with the option of a tunnel at inordinate expense for the sake of views from the lower slopes of Remuera.

The road at least is an election commitment. It's Westhaven that worries me.

Why, I wonder, would a local body want to lay out public money on a marina? Yacht harbours appear to operate perfectly well in club ownership with public access to the perimeter.

Westhaven's only distinctions are that it is large, very visible alongside the Harbour Bridge, and owned by the publicly controlled port company, that wants to sell it.

The fact that a property happens to be in public ownership is always reason enough for some people to oppose its sale. They are people who probably never sell assets of their own, except, obviously, their house or car, which they change rarely.

They seem never to have heard the commercial logic that if you are not interested in running a particular asset to full value, you are better off extracting its value by selling it to someone who will.

When they find themselves with a valuable item they are not really using, I suppose they hoard it or give it away. Should somebody offer them a price for it, they suspect it must be worth more.

In every trade they think one side is ripped off, and they fear it is likely to be them. They probably don't own a yacht, let alone a mooring at Westhaven, and never go near the marina to use the public rights they are anxious to preserve.

They don't care how many people use the public access now or would use it in the future. Public ownership is a matter of principle for them.

I could respect that view if it came with the sense of financial stewardship that property always requires. But to these people, asset ownership is a passive business and public accountancy matters not at all.

I know this because they have been outraged that the port company would not simply give Westhaven to the council. They cannot credit how one public body, Infrastructure Auckland, holding 80 per cent of the port company, could insist that another public body, the city council, pays a market price for an asset the public already (mostly) owns.

As I understand it, the reason these transactions occur - in fact the whole reason bodies such as Ports of Auckland Ltd and Infrastructure Auckland exist - is for transparent economic investment.

Publicly owned companies were set up to run the assets as if they were in the private sector, where their true costs would have to be recovered in their charges and care would be taken to ensure continued investment would be commercially worthwhile.

Westhaven seems to me a prime example. Since the port company has decided the marina is not really its business, it is in the public interest that the value of the marina is obtained in a sale. The value should be extracted now even if the buyer is another public body, in fact, especially if the buyer is a public body.

Westhaven could easily lose value under the ownership of a council that is far more exposed to the fickle winds of politics than the port company or Infrastructure Auckland has been.

Political pressure could mean berth-holders are charged too little or too much. Council administrators might take less care with maintenance. Future investment may be neglected or even politically resisted.

Why should the council put public money into a facility for rich yachties? It's better to ask that question before buying it.

At least a sale means the port company will have extracted full value for the public before the property deteriorates. And the port company, let it be remembered, is the main source of revenue for an upgraded passenger railway much desired by some of the same people who want to keep Westhaven in public ownership.

But then, they have cheerfully witnessed a death sentence recently delivered by the Government on Infrastructure Auckland, which had been charged with investing the port earnings for the improvement of Auckland's transport and drains.

It was a businesslike body that took its investment tests seriously - too seriously for the liking of the regional and city councils when they put up requests for funds.

In a few months Infrastructure Auckland will be no more. Its funds will pass to a more compliant subsidiary of the Auckland Regional Council.

It is a victim of the common attitude that when public finance is available, you simply spend it. Public wealth, in the minds of many, is limitless.

In a sense they are right. Money can always be "found" by public bodies because they have the power of taxation. They don't even need to use the power to increase rates or taxes, they can borrow readily and relatively cheaply against the security it provides.

Ultimately there are limits on the ability of wealth-producers to serve the appetite of public interests, but the limits are well beyond the expense of any single project. So while it is easy to win votes for fiscal responsibility in principle, it is hard to uphold the principle against particular proposals.

That's the reason, I suppose, that John Banks is leading the bid for Westhaven. That, and election year.

But he was in Parliament 20 years ago when the place woke up to its accumulated liabilities. He really knows better.