Auckland Mayor Wayne Brown . Photo / Dean Purcell, File
Auckland Mayor Wayne Brown . Photo / Dean Purcell, File
Opinion by Wayne Brown
OPINION:
Outgoing Mayor Phil Goff left behind a $295m hole that, by law, must be filled in with the next Auckland Council budget.
To do this requires an unpalatable menu of cost savings within the council, cuts to some council grants and services, possible increases to council’s already burgeoning debt, the sale of non-performing assets and increased rate levels - all at a time when ratepayers are under pressure from increased mortgage payments and inflation.
Consultation has shown how unpopular some of these cuts are, particularly things affecting our various communities.
Some of that pressure will hopefully be relieved by forcing the Government to take over things that the council does, such as the Citizens Advice Bureau. The CAB should really be the government’s shopfront for problems accessing government services such as ACC, Ministry of Social Development and Justice problems.
The council will need some room to trade off the worst cuts against a small rates rise. To do this, we absolutely need to sell the airport shares.
An artist's impression Auckland Airport’s planned new integrated terminal. Photo / Supplied, File
Council’s share of the airport has been steadily drifting down to the point where we don’t even appoint a director anymore. This is because the council has not been able to meet calls for capital raising and this will continue as the airport needs to raise more capital in the future for things such as the proposed $3 billion extension.
The airport is an investment suited to long-term holders like pension funds who collect money from young people to pay them back many years later.
The council is a single-year operator, costs coming in must meet costs going out, with rates and debt to balance things.
The airport returns have never met the costs of owning the shares and never will, so it is a lousy investment for debt-burdened ratepayers.
In the past three years, holding those shares has cost the council $240m in interest payments in order to receive a dividend of nothing. This is just stupid.
So why do some councillors not get this? It was labelled as “strategic” which it probably is, in terms of Auckland needing an airport - but owning the shares is anything but strategic.
The airport can’t be picked up and taken away. Baggage handlers and all the other airport trades will still be needed whoever owns those shares, so emotive nonsense about protecting jobs is just unhelpful.
Others worry that selling the shares will just allow the council to roar ahead with previous unchecked levels of spending, but the new council Expenditure Control Committee under the very effective leadership of Maurice Williamson will prevent that from happening.
Indeed Williamson’s remarkable computer skills are proving more than a match for those trying to hide dumb expenditure and out-of-control growth within council.
Some are suggesting debt increases as a way out, but with looming blowout costs from the City Rail Link and the storm damage, that’s foolish, especially now when interest rates are heading up.
Wayne Brown. Photo / Michael Craig
The best result will be the sale of the airport shares, reducing debt servicing by $80m per year, and a negotiated mix of hard cuts within the council’s own costs; modest cuts to community-facing costs; and a modest rate rise.
Failure to sell the airport shares will force a hard rate rise and hard cuts everywhere, which as Mayor, I certainly don’t want.
