Edmund Burke once described society as a “contract between three interested parties, the living, the dead and the unborn.” I
I was reminded of this during the protracted debate on the sale of Auckland Council’s airport shares. Auckland International Airport was built in the early 1960s by Auckland local authorities and the government. It was opened in January 1966 by prime minister Keith Holyoake amidst much fanfare and Auckland civic pride. Managed by the Auckland Regional Authority it quickly became the busiest airport in the country and soon Oceania.
As part of the rogernomics reforms of the 1980s, the airport was corporatized, the shares split between the government and Auckland local bodies. Soon after, Papakura District sold its shares to the government thereby giving it majority ownership. In 1998 the Shipley government used this to privatise its shares. North Shore City soon followed. In 2002, Mayor John Banks’ first budget proposed to sell all Auckland City’s shares but in the face of widespread opposition, eventually sold half. In response Manukau City under Sir Barry Curtis bought up more shares to block a takeover by a foreign interest. The remaining shares, along with the Ports of Auckland were gifted to the new ‘Super City’ in 2010.
This was the situation when soon after his election Mayor Wayne Brown announced his intention to sell all the shares. In a case of ‘history repeats’, last month, just as in 2002, the council voted to sell just under half its remaining portfolio.
I, along with Councillors Fuli, Filipaiana, Dalton, Bartley, Leoni, Walker and Watson argued long and hard to retain all the shares. This for three reasons:
No public mandate. Pro-sale mayor and councillors gave no indication to voters of their intention to privatise assets during the recent elections. For my part opposition to selling airport shares, along with the port and the downtown carpark was an explicit commitment in my election manifesto.
Also the majority of local boards opposed the sale. Finally, the largest proportion of public responses to the council’s consultation questionnaire was for ‘no sale’. (And on the subject of election commitments, I and my seven colleagues moved unsuccessfully for a residential rates’ increase of 6.7%, 1% lower than that proposed by the mayor, but with $140m of additional debt as opposed to the mayor’s $80m (now $105m). Regarding election promises Labour/Green voters will be disappointed at some of their councillors who betrayed election promises to oppose selling public assets.
Legally questionable process. Airport shares are deemed a strategic asset and therefore the council was required under the Local Government Act to adopt a ‘special consultative procedure’ before selling them. Along with other process failings, the council overlooked resolving to do this. Under the Act council is also required to provide a ‘fair representation’ of key issues in its consultation ‘summary of information’.
The loaded questions in council’s consultation material were anything but ‘fair’. Retaining the shares was always conflated with higher rates increases and higher debt, but the financial benefits of retention, including this year’s and future dividends were never mentioned. Given the bias and the push-polling tactics of the council, it’s all-the-more remarkable that the largest portion of Aucklanders voted to keep all the shares.
Short-sighted financial decision. Not mentioned in council publicity was that since 2010, despite the covid years, the value of airport shares has increased by some 360%, benefiting Auckland Council by some $1.7b, comprising $344m in dividends and some $1.4b in capital gains. I reject the argument constantly pushed by council finance bureaucrats that holding airport shares ‘costs’ the council interest, any more than keeping the Town Hall or our parks. It is revealing that at the start of the ‘Super City’, council debt was $3b, now it’s closer to $12b and that has absolutely nothing to do with airport shares but much to do with profligacy and inept financial management.
Had the legacy councils retained all their original shares, Auckland ratepayers this year could have expected $117 million in dividends instead of $42b. Now because of the part-sale decision, this will be reduced to $16m. That being said, managing to hold onto to most of the council’s shares (11% of the total) in the face of months of intense pressure was something of victory for Auckland public opinion and the tenacity of those councillors who refused to sell out.
In the end the mayor was astute enough to compromise on the share sale and to withdraw his unpopular cuts, but I suspect total sale remains on his agenda as well as selling the Port company. In other words to asset strip Auckland.
To return to Edmund Burke and his social contract, the shares in Auckland International Airport, like the Ports of Auckland, and prized civic facilities were handed down to us by the visionary generation who built Auckland. They should be managed wisely and handed on to coming generations of Aucklanders. That’s the difference between inter-generational equity and inter-generational theft. (MIKE LEE)
www.mikelee.co.nz
Pictured: The same old battle. Auckland Regional Council March 1992. Newly elected Mike Lee rises to second the motion which stopped the privatisation of Ports of Auckland by one vote. At his left Bruce Jesson who proposed the motion.
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Published: 3 July 2023