Seven councillors back keeping Wellington Airport shares
Seven city councillors say they would stop the sale of Wellington airport shares, out of nine who showed up to a public forum last night. The Labour and Green councillors found an unlikely comrade in conservative councillor Ray Chung, wearing a bomber jacket, who said he would not support the sale. “We can’t trust the council not to take the money and spend it. That’s all they’re good at doing.”
Unions Wellington organised the “Keep the Airport Ours” forum, complete with matching T-shirts and badges, to ask Wellington City Council to commit to keeping the airport shares in public ownership.
The council currently owns a 34% shareholding in Wellington Airport. As part of the Long-Term Plan consultation, it is proposing to sell the shares and establish an investment fund to insure the council against natural disasters.
Billions of dollars in council assets are not protected in the event of disaster because of the city’s increased earthquake risk – making it difficult for the council to insure more than $750 million, chief financial officer Andrea Reeves said last week.
The bulk of the council’s financial assets, which could be critical to the city’s recovery after a natural disaster, are located in Wellington in the form of physical assets: the airport and the land under several buildings.
But unions have organised against the plan to sell airport shares, saying the council should be attaining greater ownership of public assets.
Craig Renney, from the Council of Trade Unions, was the first speaker at the forum. He said he had sympathy for the council and its difficult financial position, but selling the shares for an investment fund didn’t make any sense. “Councils are bust, they’re up to their own debt limits, facing difficult decisions about what to do next.”
The rebuild from the Christchurch earthquake had cost $38 billion “and counting”, Renney said, so he questioned whether an investment fund with around $500m – the maximum likely market value of the shares – could cover that cost. The 1-in-1000 year event the council was concerned about had about a 0.1% chance of occurring.
“The fund is not actually about managing insurance risk because it’s not covering any of the risks at all,” he said.
Councillor Nīkau Wi Neera, who said he was committed to keeping the shares, agreed. “There is no lever we can pull that moves the dial on this insurance problem.”
But, Wi Neera said, with people throwing around the word “commissioners”, the council had to be seen to be doing something about the lack of suitable insurance.
“If we get that 1-in-1000 year event tomorrow, we were at least thinking about the pathway to resolve it,” said deputy mayor Laurie Foon, who also said she wanted to keep the shares.
The proposal to sell the shares wasn’t the first option council staff came up with, said Geordie Rogers, but it was the “least worst” option. While he did not support selling the shares, he acknowledged the city was facing “really massive risks”. Rebecca Matthews, chairperson of the Long-Term Plan committee, said insurance was a challenging, complicated issue and could be tough for the city. “I’m not going ‘rah rah these things are easy to fix’. They are hard.”
Tim Brown was the only councillor who said he wanted to sell the shares, with Iona Pannett refusing to commit to a position and having to go through a special meeting vote to be allowed to speak.
Brown, the architect of the plan to sell the shares and former chairperson of majority airport shareholder Infratil, has pointed out that the airport shares would probably lose their value in an earthquake, meaning they were not a good asset to hold in case of natural disaster.
An investment fund, on the other hand, was “the only thing the council can do” to make up the $2.7b insurance shortfall, Brown said at the forum.
The councillor most opposed to the sale has been Labour’s Nureddin Abdurahman, who compared it to asset sales of the 1990s including the council’s controversial decision to sell Capital Power – selling 49% in 1994 followed by the remaining 51% in 1996, for a total of $243m.