Auckland Council debates selling airport shares, Mayor Wayne Brown faces first big leadership test

Auckland councillors have broken up from an all-day meeting on Mayor Wayne Brown’s controversial budget without making any decisions on a partial sale of Auckland Airport shares and other issues.

Brown closed the meeting at 5pm for councillors to resume business in the Auckland Town Hall at 10am tomorrow.

Just before the meeting closed, councillor Lotu Fuli put forward an amendment to the budget to delay any sale of the airport shares until next year’s 10-year budget, holding household rates to 6.8 per cent and increasing debt from $100 million in Brown’s budget proposal to $160m.

Earlier, Brown proposed a partial sale of the shares in a bid to strike a “consensus” with fellow councillors.

Brown’s new proposal is for a part-sale of shares (8.09 per cent of the 18.09 per cent holding). He said this would achieve savings of $28 million next year and would limit rates increases to 7.7 per cent. He made the suggestion after today’s council budget meeting resumed at 2pm after lunch.

“This will save a net $28 million of interest costs in the coming year,” he told councillors.

“I’m proposing we will the gap with a general rates increase of 7.7 per cent for the average residential property.

“I know there are still some councillors who want more comfort we will not squander the money made from the airport shares.”

Earlier today both sides of the debate gave impassioned speeches, with Mike Lee calling the sale the biggest asset sale in Auckland’s history and Maurice Williamson saying even the good times are bad for holding the shares, which are valued at about $2.2 billion.

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Williamson said there are more costs coming down the pipeline for the council, warning that he had been told the final cost of $5.5 billion City Rail Link will be $7.5b.

”We do not need to own an asset that is not washing your face,” Williamson said.

Councillor Kerrin Leoni said she agreed with Brown’s budget, except for the partial or full sale of the airport shares, which should only be sold as a last resort, saying she would be happy to consider a small increase in council debt.

Several councillors said a lot of the issues before them today - the sale of the shares, spending cuts, revenue and debt - would be better dealt with at the next 10-year budget, which comes next year.

Before the lunch break, each of the 20 councillors was given five minutes to say what they think an ideal budget would look like in an “open workshop” setting. At the end of the roundtable comments from councillors, Brown said he would consider what he had heard and whether he would make any changes to his “latest, latest, latest budget” after the lunch break when the formal process of approving the budget resumes. The meeting resumes at 2pm.

At the end of the round table when all councillors expressed their views, it seems clear a proposal to sell all the council’s airport shares would fail, but a part-sale seems to enjoy majority support.

There was very limited support for raising rates more than one or two percentage points above inflation, and possibly not even that. There is support for adding more short-term debt. The outcome is not clear, but a mix of part-sale of the shares, plus a small rates rise and some extra debt seems probable.

Mayor Brown’s proposal to sell the shares has a net cost of $60 million on the council budget - it will cost about $100m in interest costs to hold the shares, offset by a $40m dividend this year.

Under the councillors’ amendment, they would increase debt by $60m to cover the net cost of holding the shares. This would see debt increase from $80m as proposed by Brown, to $140m.

Councillors are meeting today to debate the annual budget and Brown’s desire to sell the council’s Auckland Airport shares, valued at $2.2 billion.

Brown told the meeting they had a “big day ahead of us” and he was hoping for a constructive debate.

In a late twist mere hours before today’s meeting Albany councillor Wayne Walker declared he is the beneficiary of a $3 million shareholding in Auckland Airport - only hours before councillors vote on a proposal by Mayor Wayne Brown to sell the council’s shareholding in the airport.

Walker confirmed to the Herald this morning that he and family members were beneficiaries of the shares held in the estate of his late father.

Brown told councillors that selling its airport shares was the best option for the council.

“The budget keeps rates affordable in line with inflation, in the context of a cost of living crisis,” he told the meeting.

“I don’t receive any income from the shares,” Walker said, saying he had been working through advice on whether he could vote on the proposed sale of the council’s 18 per cent shareholding, worth $2.2 billion, at today’s meeting.

The meeting is taking place in the Auckland Town Hall and started at 10am.

Walker told the Herald one hour before the start of the meeting that based on advice from the council’s legal team and the Office of the Auditor General he could vote on the share sale today.

He said Brown planned to ask councillors to make a statement at the start of the meeting ahead of the declaration of interests, which takes place at council meetings.

“That is the appropriate thing to do,” said Walker, who confirmed he will make a statement.

Auckland Council chief executive Jim Stabback said Chris Darby and Julie Fairey had received the same advice provided to Walker.

All three councillors are believed to be opposed to the sale of the airport shares and if they choose to vote will make Brown’s job of offloading the shares more difficult.

Auckland councillor Wayne Walker.

Council staff have been looking at all councillors’ and their spouses’ share ownership in case it created a conflict which could prevent councillors from participating in the vote. This has involved discussions with the Office of the Auditor-General.

Two councillors have been forced this week to amend the public record to show that they held a financial interest in Auckland Airport.

Julie Fairey and Chris Darby updated their declarations of interest to show that their spouses held shares in the airport.

Both councillors are believed to be against selling the council’s airport stake. If they were prevented from voting or stood aside because of a conflict of interest, the contest could become much tighter.

‘I think the mayor’s sadly short by one or two [votes]’

Meanwhile Auckland Council expenditure committee chair Maurice Williamson said today he was not sure if the Auckland Airport share sale would go ahead, but he supported it wholeheartedly.

Speaking to Mike Hosking on Newstalk ZB, Williamson said there were a few councillors in the middle who had not made up their minds.

“I think the mayor’s sadly short by one or two [votes], but I can’t say that for a fact.”

Auckland councillor Maurice Williamson says he supports the sale of the Auckland Airport shares. Photo / Brett Phibbs

Williamson said he supported Brown’s budget and that the Mayor had inherited budget issues he didn’t create.

“He’s done a fabulous job,” Williamson said.

The Mayor had reinstated some cuts that were unpopular.

“I think it makes good sense, he’s putting back all those cuts that were making people upset, like the Citizens Advice Bureau and arts.”

Williamson said if only half the airport shares were sold, he thought there would be more cuts and rate increases.

“I don’t want people facing horrific rate increases when it’s not necessary.

“I don’t know where it goes from there.”

Councillors may be asked to consider selling some but not all of the Auckland’s Council’s shares in Auckland Airport today as part of a compromise to get Mayor Wayne Brown’s first budget over the line.

Brown wants to sell the shareholding to help address a $325 million budget shortfall, pay down debt, and keep rates below the rate of inflation.

Deputy Mayor Desley Simpson told the Herald that the council consulted on not selling the shares, selling some of them, and selling all of them.

“Those options still stand,” Simpson said.

Protest group Extinction Rebellion plan to rally at today’s council meeting as part of a coalition against Mayor Wayne Brown’s Budget.

The Stop The Cuts coalition say they are against running down community services, privatising public services and denying the climate crisis.

The group claims Mayor Brown doesn’t have a mandate for his budget cuts because voter turnout in Auckland’s local government election is low.

“We are experiencing the effects of a 1.2 degree post-industrial temperature increase which have brought the January floods, Cyclone Gabrielle, other floods, plus fires and droughts, the group said.

”These are unprecedented but expected.”