Georgina Campbell is a senior journalist based in Wellington who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working at Newstalk ZB.
ANALYSIS
Officials and
Georgina Campbell is a senior journalist based in Wellington who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working at Newstalk ZB.
ANALYSIS
Officials and Mayor Tory Whanau last year insisted the Wellington City Council was not facing a financial crisis. However, when the sale of the council’s 34 per cent share in the capital’s airport looked shaky last week, it was revealed at the eleventh hour that $450 million of capital spending would need to be cut if the shares were not sold.
Council chief executive Barbara McKerrow has defended the handling of the sale, saying councillors had been warned several times what was at stake.
But councillor Ben McNulty has accused Whanau and council officials of “an incredible rewriting of history”.
“At no point until one week before the vote to sell the airport were we made aware that holding the airport would have direct ramifications for other parts of the WCC budget”, McNulty commented on social media.
Council officials have been keen on getting rid of the shares for some time, citing the need to diversify the council’s investments.
They last tested the waters for a sale in 2021 with a secret paper delivered to councillors who then decided to make the whole thing public. The idea went down like a lead balloon and was voted down 10-4.
Officials managed to find an ally in Whanau for their cause and the council agreed to consult with the community on selling the shares.
Whanau said at that time that the council had all its eggs in one basket.
“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.
“Instead - to spread our risk and secure our financial resilience - officers have come up with a solution that sells our minority share in Wellington Airport and recycles the funds.”
She successfully proposed that the proceeds of the sale would be put into an investment fund with strong environmental and social criteria and be protected against future councils withdrawing the capital to pay down debt.
There was no threat at that time of $450m in capital spending needing to be slashed if the council did not go through with the sale.
It was also not mentioned in public consultation documents, which said retaining the airport shareholding would have no impact on council rates or levels of service.
This option meant the council would need to retain the $272m of headroom held in its debt-to-revenue ratio. This would limit the council’s ability to fund other projects, the documents said.
We don’t know what has been said to councillors behind closed doors, including if they knew about this budget hole much earlier in the piece.
Regardless, the public didn’t have that specific information when it was consulted on the sale. “Limiting the council’s ability to fund other projects” is not nearly as black and white as cutting $450m from the budget.
To put that money into context- the council’s cycleway network rollout is costing $121m, redeveloping the Courtenay Place section of the Golden Mile is about $54m, the new Tākina exhibition and convention centre was $180m, earthquake strengthening and refurbishing the Town Hall could cost as much as $329m, the city’s new sludge facility is $400m.
In other words, $450 million is substantial, especially in the context of a budget that has already been trimmed to cut costs.
McNulty and other councillors say this reality was revealed to them only a week before the vote to sell the airport. It seems Whanau did not have a majority firmed up to sell the shares at this point.
That’s because she went on the radio with Newstalk ZB Wellington Mornings host Nick Mills three days before the vote and said a full sale was unlikely and she was leaning towards a partial sale.
A few days later, the council voted in favour of a full sale.
It’s difficult to square this alarming $450m warning with the way officials and Whanau insisted last year that the council was not in a financial crisis.
Wellington City councillor Diane Calvert sought legal advice in September 2023 to reveal the council needed to cut capital expenditure by “tens of millions of dollars if not hundreds of millions of dollars” in the coming years.
Calvert listed pressures including Te Ngākau Civic Square, upgrades to social housing, rising insurance costs and earthquake risks.
“This is a financial crisis for us”, she said.
Whanau denied it was a financial crisis and McKerrow said there was still significant capacity to invest in the city’s infrastructure.
This could be accommodated within the council’s self-imposed debt ceiling (debt-to-revenue ratio) of 225 per cent, McKerrow said.
So, is this all an “incredible rewriting of history”? It’s an incohesive narrative at the very least.
The once-thriving hub has been restored to its former glory.