Tory Whanau’s airport share sale at risk: All you need to know ahead of crucial vote

Wellington Mayor Tory Whanau supports selling the council's shares in Wellington Airport.

• Wellington City Council is voting on whether to overturn a decision to sell its airport shares.
• Up to $600 million may need to be cut from the council’s 10-year budget without the sale.
• The issue will be considered at a full council meeting at 1.30pm on Thursday.

A significant vote is coming before the Wellington City Council this week which could undermine one of Mayor Tory Whanau’s only significant wins of her first term.

The council will decide on Thursday whether to stick with a decision to sell its 34% share in Wellington Airport or stop the sale.

Whanau is in favour of selling the shares but there is serious doubt whether she can wrangle a majority for her position.

Selling the shares, worth $280 million, was a critical part of the council’s Long Term Plan which has just been signed off.

Dramatic cuts would need to be made to this 10-year budget without the sale, raising the question of whether Government intervention might be warranted.

Local Government Minister Simeon Brown has previously warned that it would be a “significant issue” if the council could not pass its budget.

Why does the council want to sell the shares?

Two serious financial risks to the council’s balance sheet are being used to make the case for the sale.

The first is that the council is underinsured to the tune of $2.6 billion in the event of a major earthquake. This is a 14-fold increase from 2021, council documents said.

It means the $272m of debt headroom that the council has been keeping as a buffer in case of such a significant event is now inadequate.

The Wellington City Council's 34% shareholding in Wellington Airport is worth about $280 million. Photo / Mark Mitchell

The second risk is that the council has all its eggs in one basket when it comes to its investment portfolio.

About 93% of the council’s portfolio is in ground leases and airport shares. This means the council’s investments are exposed to similar risks, particularly natural disasters.

The council proposes to reinvest the sale proceeds into a perpetual investment fund.

Whanau has said any investment fund would have strong environmental and social criteria and be protected against future councils withdrawing the capital to pay down debt.

“Let me be clear – I will never lead a city that sells airport shares to pay down debt. I have never supported selling the silverware to pay the mortgage”, Whanau said at a previous council meeting.

Who is opposed to the sale?

Some of the strongest opposition to selling has come from Labour Party councillors.

The Wellington Labour Party has launched a campaign against selling, with local government committee co-chair Paul Tolich arguing the airport is a strategic public asset and critical to the city’s economy.

“Public ownership gives us a say in how our city’s airport is run, both now and for future generations. This is even more important as we work to reduce our city’s carbon emissions,” Tolich said.

“If we hand full ownership to private interests, we lose control.”

Earlier this year, Labour councillors Ben McNulty and Nureddin Abdurahman and Green Māori ward councillor Nīkau Wi Neera, who all voted against the sale, publicly withdrew their unconditional support for the mayor’s policies after the controversial airport vote.

Labour Party councillor Ben McNulty says the collateral damage caused by the airport sale has been immense for all parties involved. Photo / Mark Mitchell

They were concerned it was presented to them by council officials as a fait accompli, that the mayor did not campaign on the sale but championed it, and it was revealed at the eleventh hour that hundreds of millions of dollars in capital spending would need to be cut if the shares were not sold.

Meanwhile, councillors Tony Randle, Diane Calvert and Nicola Young, who all supported the sale, have changed their minds and now oppose it.

Randle has said capital spending was not reduced to maintain $272m of insurance debt headroom, which he said was their condition for supporting the sale.

Why is the sale being voted on again?

With the numbers in favour weakening, some councillors investigated whether the sale could be voted on again during the Long Term Plan process.

But Whanau left no opportunity for it to be revisited, leaving some councillors to vote against the entire Long Term Plan in protest.

McNulty has previously asked what options there were to stop the sale.

Chief financial officer Andrea Reeves said if the Long-Term Plan was signed off, including the airport sale, officials would report back to the council in December with recommendations outlining the process to sell the shares.

She confirmed councillors would have an opportunity at this time to say they didn’t want to progress.

However, Abdurahman has now filed a Notice of Motion (NoM) forcing the issue to be voted on this week.

“At a time when Wellingtonians are facing a 20% increase in rates, it is simply irresponsible to continue with the sale process until December, which would potentially spend millions on consultants and legal advice for a sale that lacks support,” Abdurahman said.

Labour Party councillor Nureddin Abdurahman says it is irresponsible to continue with the sale process until December. Photo / Mark Mitchell

It’s understood the amount saved by stopping work on the sale process would be comparable to the cost of undertaking an amendment to the Long Term Plan, including auditing costs.

The NoM asks the full council to reconsider the sale rather than the Long Term Plan, finance and performance committee, where it was first voted on and where mana whenua representatives have a say.

This is important because these two mana whenua representatives, who have voting rights at committee but not council meetings, support the sale – bolstering Whanau’s numbers.

Last week Taranaki Whānui representative Holden Hohaia emailed all councillors on behalf of himself and Ngāti Toa Rangatira representative Liz Kelly with a message for those who had signed the NoM.

“You have excluded mana whenua from having their voices heard at the committee table and that, on the face of it, represents a breach of the Tākai Here agreement.”

Abdurahman said he has tried to resolve any issues in “the most respectful manner possible” but has confirmed he has no intention of withdrawing the NoM.

The NoM has been signed by councillors Abdurahman, Wi Neera, Young, Calvert, Randle, McNulty, Ray Chung, Iona Pannett, and Teri O’Neill. This is a majority around the council table.

What does it mean if the decision is reversed?

If the Notice of Motion is successful, all work on the sale and establishing a perpetual investment fund will stop.

Council officials will begin planning an amendment to the recently agreed Long Term Plan.

Cycleways could be on the chopping block if the airport shares are not sold. Photo / Mark Mitchell

Hundreds of millions of dollars could be cut from the council’s capital spending to create additional debt headroom to respond to insurance risks.

“These cuts will only be a risk mitigant; it is not possible to sufficiently reduce debt to address the insurance risk through creating headroom”, council documents said.

“It is also important to note that these cuts will do nothing to address the diversification risk and the lack of resilience in the council’s balance sheet from the natural hazard exposure – both of these risks would remain.”

Increasing debt headroom to $500m would require $400m worth of cuts and increasing it to $750m would require $600m in cuts.

Projects that could be on the chopping block include more cycleways, the Golden Mile, community and facility upgrades, and improvements to services like rubbish and library collections.

The council will need to consult on the change with options that include a full sale of the airport shares, a partial sale, or no sale, officials said.

The amended Long Term Plan would eventually be adopted in June 2025.

Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.