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 $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. 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%’), 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 our 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’).
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 around $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 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 emergency 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 $39m, 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 and bulk sale discount for all this could amount to $150m.
If the 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.
Versions of this article appeared in the NZ Herald (31 May 2023), Ponsonby News (June 2023) and The Daily Blog,