Council’s asset stripping Long Term Plan – a long term disaster for Auckland
The Port of Auckland, 100% owned by the people of Auckland and earning $1M a week. Mayor Wayne Brown no longer wants to move the Port – just its ownership. Long Term Plan – or Long Term Scam?
On 20 February, Auckland Council’s Budget Committee chaired by Mayor Wayne Brown signed off the Council’s draft $102 billion Long Term Plan.
The key feature this year, apart from the rates increases (7.5% this year, 3.5% in 2025 [election year] and 8% in 2026) is the proposed 35-year lease of the Port of Auckland, and the sell-down of the remaining shares in Auckland International Airport. The plan is out for public consultation – or should I say council’s version of public consultation – until 28 March.
Last year Wayne Brown despite having no popular mandate for asset sales (he never mentioned this once in his election campaign), tried and to sell all the council’s shares in Auckland International Airport (which amounted to 18% of the total), managing to muster enough votes to sell just under half. This was achieved only after much political arm-twisting and trading jobs for votes on the part of the mayor. At the same time the council pushed through the biggest general rates increase in the 22-year history of Auckland Council.
The Airport shares, gifted to Auckland Council in 2010 by the legacy Manukau City and Auckland Councils, are a sound inter-generational investment, being of both strategic significance and commercial value, the dividends providing long-term income supplementary to rates. Hard on the heels of his decision late last year to sell the Downtown Car Park Building, this year Mr Brown is determined to sell the remainder of the airport shares and also via a 35 -year plus? lease, to effectively sell the Port of Auckland, valued between $2-3 billion.
The stated reason for the sale of the airport shares last year was the need to repay council debt, however council debt levels and debt-to-income ratios, have ended up very much as they were before the sale. This is because, despite election promises to ‘fix Auckland’, Mr Brown has shown no interest in tackling the council’s and its CCO’s systemic spending problem. This time he has come up with a completely new reason for pushing a massive sale of the council’s strategic assets – the biggest privatisation in New Zealand local government history: the pretext this year is to liquidate those income earning assets and put the cash into a ‘professionally managed Future Fund’.
Many of us will remember what happened in 2018 to the council Diversified Asset Fund (c $400m worth of international stocks, bonds and cash) inherited from the ARC and which until then been managed by a small but highly competent CCO, Auckland Council Investments Ltd, earning an average 18% return. Ironically some of the same council finance officers, who five or six years ago successfully pushed to get hold of the Diversified Asset Fund, and once having got hold of it then promptly cashed it up and spent the funds, are now extolling the value of the mayor’s ‘Future Fund’. The chances of this ‘Future Fund’ (in reality a cash Slush Fund) avoiding the ultimate fate of the looted Diversified Asset Fund and the predatory legal and accounting consultants the council has already been spending $100,000 a day on are slim indeed.
If the mayor gets his way, the remaining airport shares, still a very significant package, amounting to 11% of the AIAL total share-holding worth c$1.4 billion, will be transferred to the ‘Future Fund’ but the predetermination, which lies beneath the glossy veneer of the ‘AK Have your Say’ Consultation Document, is revealed by the following statement which appears twice, on pages 9 and 59. “It is almost certain that most if not all of the AIAL shares, would be sold over time”. So much for consultation. So much for democracy.
Mayor Wayne Brown who came into office on a promise of ‘fixing Auckland’ is now halfway through his term. His actual record of fixing anything is modest indeed, (think road cones and AT). In his first year in office the mayor banged on about moving the port from Auckland. That obsession has been replaced by a new one, moving not the port – but moving the ownership of the port – from the people of Auckland, our children and grandchildren, to wealthy foreign shareholders, probably from Dubai. Once that lease is signed, it will almost certainly be extended at the convenience of the leasee. It’s effectively a sale.
Most troubling is that the council, as it did last year with the sale of the airport shares, and the Downtown Car Park Building (currently stalled by legal action) is trifling with its statutory public consultation obligations set out in the Local Government Act. Despite this being legally a ‘special consultative procedure’ relating to strategic assets, the consultation the public will be getting will not include the traditional right for ordinary citizens to present to their elected councillors in a formal public hearing. There will be hearings for selected ‘regional stakeholders’ of course – but not for the ordinary citizens of Auckland, the people who candidate Wayne Brown convinced was ‘Mr Fix-it’. Rather than Mr Fixit he has turned out to be ‘Mr Sell-it’.
Versions of this article were published in the NZ Herald, 6 March, Ponsonby News March edition, The Daily Blog and Gulf News.
