GUEST BLOG: Mike Lee – Council’s airport share privatisation will disinherit future generations of Aucklanders
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.
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 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.
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?
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.
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 ?
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?
Thank Christ the Dementia mayor clearly doesn’t have the numbers. Sanity prevails.