Auckland councillors are about to make a decision on the centrepiece of this year’s council budget – the sale of publicly-owned shares in Auckland International Airport (AIAL). The $2.3 billion plus privatisation would be the biggest single sell-off of council assets in Auckland’s history. If this wasn’t controversial enough, it’s been linked with quite savage cuts to funding for local board and community services. Not surprisingly, the annual plan consultation process has drawn a record response from Aucklanders who are pushing back strongly.
Even before the new mayor and councillors were sworn in, senior council managers were issuing dire warnings of a looming budget crisis. The supposed deficit has progressively grown from $270m to $295m to $325m. Over the last six months, in briefing after briefing, the message from finance managers has been drummed home to councillors: council is facing a grave financial crisis; the only solution – sell the airport shares. That, plus deep cuts to local services.
The mayor has been fronting this proposal but it’s not his idea. And there is no political mandate for it. Privatising the airport was never mentioned in the 40 or so mayoral campaign debates during last year’s election, nor in any campaign advertising. In fact, selling the airport shares was pitched by council managers to the previous mayor Phil Goff several times – and firmly rejected. Clearly an agenda is being pushed here. In the recent Annual Plan consultation the people of Auckland were told, that apart from over-the-top double-digit rates increases (e.g. ‘22%’ according to the mayor), there was no other alternative to balancing the budget. But there are always alternatives.
Despite the one-sided council messaging, in the 30,368 public responses to the consultation multiple-choice questions regarding airport shares (‘sell all shares’, ‘sell some’, ‘no sale’, ‘other’, ‘don’t know’), the largest single constituency, the mode, 34%, opposed any sale. And of the 4% categorised as ‘other’ 590 of these commented against the sale.
In my ward, the three local boards, Waitematā, Waiheke and Aotea-Great Barrier are firmly opposed to the sale, as are our communities, with modes 47%, 47%, & 37% respectively, (factoring out ‘don’t knows’). Most local boards across the region are similarly opposed.
Auckland Council consultation material presented the public with four options, visualised as interlocking gears labelled, ‘Spending Cuts’, ‘Rates Increases’, ‘Debt’ and ‘Asset Sales’. The fact that the ‘deficit’ is largely due to a record budget with a capital spend of $2.8 billion was not made clear. Interestingly there is no Capex ‘gear’ in the council publicity material. That seems to have been hidden away behind a locked panel somewhere. Management’s argument for selling out is that holding $2.3b worth of shares costs the council up to $100m a year in debt servicing. Yet this is an expedient argument given council’s debt is derived from other largely non-revenue earning projects. The airport shares were never borrowed for, being originally allocated by central government in the late 1980s and handed on to the ‘Super City’ in 2010 by the legacy Manukau and Auckland City Councils.
It is my personal belief the present council finance ‘deficit’ crisis has been hyped to force the sale of airport shares. Though however one views the current crisis it is fair to say there are systemic spending problems within Auckland Council and its CCOs which have been evident for years. However you look at it the ‘deficit’ and how we got into this situation is deeply troubling. If the council’s recent civil defence/ emergency management response required an independent inquiry surely an independent inquiry into Auckland Council finances is well overdue. Relying on the same advice that got us into this situation to get us out of it, is not a sensible option.
As for the airport, never mentioned by council staff is that since 2011, despite the unprecedented impact of two Covid years, the value of AIAL shares has increased by 352%, benefiting Auckland Council by more than $1.634 billion. This comprises $344m in dividends and $1.3b in capital gains to council’s balance sheet (for argument’s sake we could deduct as ‘opportunity cost’ $407m in interest). Moreover, despite Mayor Brown dismissing the airport shares as a ‘lousy investment’, since last October the share price has increased by over 21%. The AIAL dividend this year will be $42m, increasing to $60m in 2025. Revealingly, this dividend has not been factored into the council’s budget. Linked to this and deeply troubling are recent media reports that ahead of any decision by the council’s Governing Body, council managers have been working on the sale with ‘Australian advisers’, the commission for which could be $150m. Council management is even prepared to forgo 5% of the value of the asset in a bulk sale. To add to the pressure being heaped on councillors, media sources report first term councillors are being contacted by the mayor’s office with dire warnings that failure to agree to a sale will mean the government will sack the council and bring in a commissioner. This is nonsense of course but underscores the high stakes in play.
If this sale goes ahead, the young people of Auckland are set to be robbed of an intergenerational asset due to a selfish, shorted-sighted attitude on the part of an older generation who should know better. Despite the painful lessons of the past, selling the family silver is back on the agenda. I find it depressing that 1980s Thatcherite style neoliberalism evidently dominates the thinking within the mirror glass tower at 135 Albert Street.
Auckland International Airport is a strategic asset built by visionary Auckland leaders, the shares secured and handed down to us by farsighted mayors, notably Sir Barry Curtis and the late Dame Cath Tizard. They comprise a blue chip investment, providing alternative income to rates, predicted to earn ongoing dividends and capital gains. Future generations of Aucklanders should not be disinherited of this legacy.
Mike Lee is a legendary Left Wing Auckland Councillor who has fought asset sales all his political career
It’s all very well railing against the sale of the airport Mike, but for your opinion to have any value, you have to present an alternative.
In my view Wayne has inherited a timebomb created by the previous two mayors, of which there are two components:
Firstly, the CRL project was never properly cost estimated, probably because its idealogical advocates wanted to slip it through the budgeting process without proper scrutiny. So, this white elephant of a project was foisted on to the rate payers by stealth; a malfeasance so bad it is criminal. Subsequently the cost has ballooned as it always would, and there may well be more bad news to come because it’s far from finished.
Secondly, the Council headcount has more than doubled compared to the number of local government civil servants employed prior to amalgamation. It’s going to be brutal, but once the budget is set, Wayne needs to go through the organizational structure with a meat cleaver. Anyone who has had to deal with the Council will tell you what a Byzantine mess it is. Words fail me in this regard; it’s just a mess of confused responsibilities, silo thinking, musical chairs and overly complex processes. The council cannot get out of its own way.
So come on Mike – what’s your plan? Stick the ratepayers with a mass rates hike?
Wayne is the timebomb Andrew he can’t even speak to media he leaves it to his Deputy and one would think to be in such a powerful position doing interviews would and should be mandatory and an important part of the job.
Wayne is too busy behind the scenes tidying up the Goof Ball’s Mess.
Sensible comments Andrew.
Andrew, so Brown’s inheriting a Financial Timebomb, what a BULLSHIT comment! Sell one fuckin Golf Course & that will settle the debt, there’s no need to sell a $2.4 billion dollar asset to settle a $234 million dollar bill! This is the usual Neoliberal lie that they truck out everytime they seek to privatise Public assets with fearmongering nonsense to sell in a Firesale to pay down Debt? What’s this gutless Mayor Brown & Maurice Williams cut from this Sale?? And what’s the point anyway, the Western Neoliberal Capitalism model is based on Debt, it’s a Debt based System & paying down debt is not encouraged, the more debt the better, kook no further than the US, the home of Neoliberalism, $31 Trillion in debt & about to raise the Credit card limit, sorry the debt ceiling to $33 Trillion! No problem!
Even more sensible comment Ant Force.
Mike – Why on earth does the Auckland Council need to pay over 200 people – $120,000+ per year?
Professional seat warmers ?
It’s just an asset to be kept or sold as needed. It is not a holy relic made sacred by being once owned by government.
The possibility of a privatisation brings out a lot of woo-woo thinking by the Left. It seems to be based on a belief that any sale of any government property is an irreversible end to the chance of socialism in their lifetime.
It is an income stream Ada its nothing to do with left or right.
It’s a toll gate Ada. As Warren Buffet advises there is no better investment.
Only if the asset is managed adequately and for that you need the “grunt” to affect change to government regulations that inhibits the business.
Maybe Aucklanders should buy the 82% shares that they do not own?
It’s a toll gate with its aeronautical pricing overseen by the Commerce Commission and the Commerce Act, so it’s not a path to golden riches.
You seem happy to ignore the question of why investors are so keen to purchase airport shares. Monopoly assets are almost money-printing machines and you can be sure that the price to use the airport will only increase (yes I know that already happens) with the profits going to the 1% on top of the pile.
Major capital spending is not usually deductible for tax purposes (that is what depreciation is for) so as Mike points out this is a manufactured deficit to suit the agenda of those wanting to sell the airport.
You may have heard about this thing called the Commerce Commission?
It regulates monopolies.
Just like the Supermarkets and the Banking Cartels ?
The supermarkets and banks are not included in the pricing oversight of the ComCom.
I have heard of the tooth fairy also & both of them are more a fabrication of a vivid imagination than a realistic controlling entity. My statement is a bit hard on the com com as they have made some big decisions but you need to be seriously bad/inept before being penalized by them.
Would seem the majority favour selling the shares,therefore get on with it.
Completely incorrect, as usual…
https://www.nzherald.co.nz/nz/auckland-mayor-wayne-brown-short-of-votes-to-sell-auckland-airport-shares/BCZTRZ2K25EUFPE6UI2SYWLVMY/
Mr.Brown won the democratic election so people should heed his sage advice,he’s the Mayor.
As did Labour.
However, your comment “majority” is incorrect to selling Airport shares. That much is obvious.
“is incorrect to selling”
Bert I’m now convinced English is not your first language.
What is your country of origin?
I know you don’t understand the common language given your pomme heritage.
“Would seem the majority favour selling the shares,therefore get on with it.
Wrong on all counts.
How are you getting on with your ankle bracelet, is it off yet?
It should be a requirement for there to be a referendum before any state enterprise is ever sold off. If there was a vote, none of the many billion-dollar public assets would have been destroyed — the fire-sale privatisations never had any public support.
Couldn’t agree more Mike.
If council wants more income how about looking at the $160 million subsidy going to golf players. I don’t say sell the golf courses just make them pay there way.
Sell the golf courses.
Poor people should not pay for golf courses that they do not use.
Ok sell the Council owned golf courses.
Wealthy won’t mind they can afford the higher subscriptions that would result.
Golf would become a sport for the elite only.
It already is.
Not really Johan,certainly not like years ago.
I’d like to see council bulldoze gang and drug heartlands first and build the fineist examples of low income high rise living environments in human history.
Can’t do that sorry Sam they have Labour Government protection.
Speaking of golf courses. Remuera GC. 800 members get their annual membership of $11,700 paid for by Auckland ratepayers! It was a sweetheart deal signed off by what’s his name Brown, 2010-2016(?) mayor of Auckland. On a 100-year contract with about 90 years to run. WTF!
Sell off the golf courses! One of the Aussie states sold off everything in the end and now are in dire straits.
Many of the golf courses are designated green spaces and are also flood prone, the Remuera Golf Course is the old Waiatarua Lake Bed which regularly floods in Winter.
If one can’t afford to manage an asset properly then it is best to sell it for the best price.
Been to Auckland airport recently?….. ever?
Well if it’s being mismanaged by the private Auckland Airport Company may be it’s time it was brought back into full Auckland Community ownership.
Also given it is an extrodinary toll gate the Council could set a special airport land rate and extract a ton more profit to pay off this so called council deficit. It would be very easy to collect either bill the airport an extra $50 or $100 mill in rates or levy an arrivals departure tax of $50 on every traveller coming through international.
So why do they not?
Regulations, perhaps?
Councils don’t control the border or set border levies – thank goodness because stupid ideas like this would be used to subsidize local government voters’ rates.
If you wanted to eliminate the deficit using rates, isn’t it better to increase rates on every property in Auckland Council? Oh wait, that’s why this whole debate is being had….
The tin pot town of Palmerston North needed a new Air Port Terminal they instituted a $25 departure tax on every traveller flying out of the air port for about 10 years and paid the capital cost of the building. See too easy.
Thats just user-pays in the form of aeronautical charges to pay for the terminal’s cost.
That happens today at every airport with an airline, and the passenger levy is included in your ticket price.
Why can’t Auckland ratepayers be grown-ups and accept they should pay for their own Council’s expenses, rather than looking to foreigners or out of towners?
The council should look at all it’s resources if one of those resources is a toll gate then it should extract monopoly profit in a way that doesn’t hurt its own citizens. That would be an arrival departure tax levied on non aucklanders ie. tourists. Set it at $50 that’s going to bring in multiple tens of millions a year which would otherwise be paid in Browns TINA rates increases – any grown up would choose to both keep an asset, make the asset work harder and avoid rates increases.
“stupid ideas like this would be used to subsidize local government voters’ rates”
Agree with this just not the part where you think this is stupid and you think it’s a subsidy. It’s an excellent idea because monopolies should be in public ownership and the monopoly profits – you either pay them directly to the ultimate citizen owners or defray their rates.
If you need a rail line from the central city to the airport because you need good infrastructure for tourists and you have the opportunity to place a toll on the tourists using the airport you do that. You don’t increase citizen rates and you don’t excessively borrow when you don’t have to. You use the monopoly power to the benefit of the citizenry.
I’m pretty sure it is not Auckland Airport that wants the rail line to the airport.
It’s wanted by the Labour Party MPs whose electorates it will run through because it will increase property values for their constituents.
Well if it’s not Auckland Airport that wants a rail link from the central city then it must be the Labour voters of Epsom who don’t want the Airport traffic running through their suburb plus the International Hoteliers in the central city and the lycra clad anti-car brigade. The car driving workers of Mangere and Mt Roskill aren’t ever thinking it would be really nice to take a train from my downtown hotel to the airport. They will however be pissed that they have to pay for a rail scheme from their rates to benefit tourist operators instead of holding onto the airport shares to pay for said scheme and reap the economic benefit of the scheme.
Oh Ada what a silly statement. Isn’t it about time Auckland and New Zealand looked forward not backwards. We will become the joke of the traveling world with our third world public travel to the airport. We want to compete on the world stage yet we quibble about transport issues that other comparable countries have had for decades. Now you have Wayne Brown wanting to sell the shares in the airport, what will he sell next year because when its gone its gone . Auckland is fast walking back to the future
I totally agree with Mike Lee. The justification for the sale has been engineered so as it appears there is no alternative. There are obviously many investors who want a share of this lucrative investment, so why not the ratepayers? Certain private interests obviously do not want us to remember the damage inflicted on our economy by rogernomics and subsequent sell-offs.
Banks sold off AIAP shares to benefit the council, where is that money and once the remaining shares are flogged off what have they got left when the next inevitable funding crises occurs in the future?
Bruce Jesson, where are you?
It is refreshing to hear from a Councillor that can count, think critically and have a lot of historical knowledge to share with us to then provide us with the context and background, to be informed without bias to then think for ourselves to determine what is the best thing ‘we’ should do.
There’s not many of these high-calibre councillors around the Auckland Councils Chamber.
Thanks mate!
And this from another councillor that can count.
J Watson.
“As far as the airport shares go, can’t help thinking of that old saying… “fool me once, shame on you; fool me twice, shame on me”. For a few years back in 2017 under Mayor Goff the council sold its Diversified Financial Assets Portfolio. This was a $335 m investment potfolio of equities, bonds and cash, like the airport shares, inherited from a legacy council, in this case the ARC. On average it returned approximately 10% per annum, some years closer to 18%, from which the council would draw down $23 m every year.
It was colloquially known as the ‘Rainy Day’ fund – now that rainy day has arrived but that fund, like a number of other major council assets, has gone…long since disappeared into the ever increasing debt ether – a debt that has ballooned from $3.9 b at the start of the Super City to a figure now fast approaching $12 b – $503 m a year in interest payments alone – (c. 25% of rates income or $1.38 m in interest payments every single day of the year… 85% of these borrowings still fixed on historically low interest rates).
Now they’ve got their eyes on Auckland Council’s most valuable asset, the $2.3 b of airport shares. After that there’s only really the Ports of Auckland left…and after that…well nothing really…all that will remain are large year on year rate increases…to use an historical analogy, the Barbarians will have sacked Rome in little over a decade!
In my view it’s not the incredibly fortuitous ownership of inherited financial assets that’s the problem, it’s something far more fundamental in the structure of this council that needs to be addressed but as yet continues to be studiously avoided … much easier to continue the same merry dance that has got us to where we are today…even if now, it’s only for a little while longer.
ps in August 2016 when the sale of the Diversified Assets Portfolio was first advanced in order “…to pay down debt’ Auckland’s Council’s net debt was $7.4 b. In 2023 it’s forecast to go to $11.9b… so not quite sure how the ‘pay down debt’ line (which is being rolled out yet again with the airport shares), actually works in practice?”
Useful report as per usual from Mike Lee, he was a member of Bruce Jesson’s team that fought a long staunch battle to keep Ports of Auckland from being flogged off to corporate pirates and parasites. Venture capitalists roam the globe looking for such assets to be handed to them on a plate by scabby local compradors.
Hopefully enough Councillors will find a spine and tell Browny to sod off. Boomer King is a bully through and through, at FNDC he picked Councillors off one by one. Plus he has no “royal mandate” apart from his own imagination, and the Auckland establishment Torys egging him on, for selling Airport shares. He is trying a TINA attack 40 years after Roger Douglas swung a wrecking ball through this country. The senior Supercity admins are neo lib adherents that should be made to reapply for their own jobs.
TINA v TIAAA. There is always an alternative.
Mike
I’ve seen the management structure of some of these departments. It’s public knowledge. It shows how many councillors and senior managers are employed there and what they earn. Quite frankly, after studying that, I say screw the ‘legacy’ – sell the shares and get rid of debt! Auckland Council knows no restraint whatsoever! Our rates are criminal. Auckland council would be had for wreckless trading in the commercial world. PS: what do councillors do anyway for a living????? They’re career politicians, nothing else.
Sell the shares clear the debt,Sir Wayne Brown.
Statue?
I didn’t know statues could speak Bob the1st. Though there was Oscar Wilde’s story The Happy Prince!
The statue, a jeweled representative of a former prince, is housing the soul of the prince. All through the summer season the birds would nestle near the prince’s head and live there during the rains. Among the birds that stay with the statue, there is a swallow who longs to see the world and want to migrate to all of the wonderful sites in Egypt…
Once a night, as winter starts to come, the prince statue persuades the swallow to take one of the jewels in his eyes to a poor family in the city.
The bird is reluctant to do any of these errands as he wants to go on migration to see the world. The window of opportunity is quickly shrinking to when the swallow can fly off safely to warmer lands. However, each night, he does as the prince statue asks.
When the prince is down to his last jewel, it is the last night that the swallow can go off to the warmer lands. The swallow is persuaded by the prince to stay with him. The swallow does this last deed and finds that it is now too late to go and dies in the winter cold…while helping the poor; the prince’s heart breaks.
https://discover.hubpages.com/literature/Oscar-Wildes-Fairy-Tales-Stories-of-a-Beautiful-Tragedian
No worries about your heart breaking Bob1st, so why not give kindness and practicality a risk-free try?
Do that every day?
Bullshit you do Bob.
One of my favourite authors Oscar Wilde.
And crayon books.
I’m out of green can you help please Bert?
Use your Dulwich grooming experience you are so proud of. I’m sure there’s a young lad you could get a green one from.
How are you going to get rid of nearly $12b of debt??
I doubt there are enough assets to sell that are worth much!!
The debt is the issue but as usual those on the left don’t think debts have to be paid.
You run the business’ the council do own at a rate of return greater than the interest rate. And over time the owned business assets increase in value and the value of the debt gets eaten away by inflation.
Key sold off the power companies. Where did that money go? The right believes taking from the poor and giving to the rich to pay off debt.
TAX THE RICH!
Make Public Transport free. That is the most powerful thing that the council could do, and make airlines pay more for their use of Auckland Airport. It is the city’s biggest tourist asset and would truly be selling Tamaki Makaurau down Te Wai Horotiu without a paddle, a waka, nor a sailboat.
Transfers the cost free transport,higher rates?
What a jumbled mess!
Flattery again NSC/bert/Gus.
No room for flattery to fit in your massive ego Bob.
But you keep massaging it by constantly flattering me.
Only your ego thinks its flattery.
But I’m just a humble chap,I don’t have an ego?
A humble egotist.
Funny that someone with an ego like yours would continue to reply.
Those regarding NZ as a flower garden and themselves as entitled gatherers of blossoms and buds would do well to realise that this is a bit like a phony war, or the 1930’s in Europe while big-mouth Frankenstein and his henchmen stirred people up.
You are carrying out Nazi-type raids on our assets, have closed down businesses run by NZs who can’t compete. What are your eventual plans? ‘The people are revolting’ may be a joke to you at present, but may become serious in time. Any real NZs among you, who love us as a people, as well as the country for its fine views from high vantage points, this is a time to look for the hidden gems that abound in people in this country. Give them an invitation and they will step forward and tell you their plans for a future, give them encouragement to achieve, and that may make all the difference to reaching that future.
https://www.rnz.co.nz/news/business/490993/christchurch-airport-buys-more-land-for-controversial-project-at-tarras
Latest is Christchurch – Earthquake devastation- taken a long time to recover and land in red zone lying idle for decades, a lack of official will and ideas to perk up the place and give citizens opportunities to trial projects. But – can put up expensive stadium, getting more so. And competing with Dunedin which probably needed a covered one though expensive.
Professional seat warmers ?
what happens after neo-libs prop their system up by flogging the family jewels…we’re down to the last 2 teaspoons and that horrid graveyboat.
Thanks Mike, yes they are doing exactly what Key + Hide set up the supercity for, to loot the assets. Mind….only the good assets with monopoly cash flow that the rentier class want…a repeat of some of the steals done in the 80/90s except this time it’s Maurice instead of Roger pulling the strings!
No doubt there will be revolving doors for some of the managers who are pushing this to further their experience in assets management world once the dust has settled.
sell it off and then blow it up. buy it back at 25c on the dollar, fix it up and do it again. governments should be more ruthless if they’re gonna play in the capitalist game.
living in a neo-liberal economy as a socialist will never work. either blow up the economy or stop calling yourself one.
Did anyone in Auckland actually read the annual financials before voting for Goff over and over again?
The left cannot read balance sheets.
The right believe balance sheets are what you make the bed with.
Thank Christ the Dementia mayor clearly doesn’t have the numbers. Sanity prevails.