On how urgent and decisive Auckland Council can be in making such a decision, I suggest, depends on the pace of action to start a fast-track programme to sort Auckland's infrastructure problems.
At the end of the day, Auckland's destiny is in its own hands.
A joint sell down, would give Council a sizeable chunk of capital to bring to the table in setting up a special purpose partnership or (SPV) with central government to drive an accelerated programme to address Auckland's rapidly worsening transport crises.
In welcoming talk of a port company sell down, Prime Minister Bill English said he was pleased to see Council looking seriously at what it could do to fund its share of the city's infrastructure. Adding Watercare to the package would, I am sure, get the action response all Aucklanders are crying out for.
In last month's Budget, Finance Minister Steven Joyce clearly signalled the watching brief Government is keeping on the potential for further investment in the infrastructure for our growing economy by way of, as he put it, "greater use of partnerships between central and local government, and between government and the private sector."
I suggest both sell downs could be structured by way of a designer ownership process, with central government facilitating an outcome that keeps both in New Zealand ownership. Designer ownership might be the Government establishing a platform that enabled funds like ACC, NZ Super, iwi and New Zealand investors to invest.
Council would get a good price, and the sell down process can be done in a way that reinforces Council's continuing regulatory control of both assets and to ensure Aucklanders don't view it as sellout of our silverware.
At the end of the day, Auckland's destiny is in its own hands.
With Council and central government facilitating a SPV that delivers a designer ownership that secures each company's ownership firmly in New Zealand hands and under an independent board of control, Aucklanders would get the benefit of a win-win:
First, we would have raised the funding required for a dramatically accelerated programme to reduce traffic congestion, boost public transport services and do key projects that have been sitting on Auckland's books in some cases for more than 20 years.
The long-planned infrastructure 'catch-ups' could at last happen, and with smart investment we would give ourselves a chance of getting in front of the demand created by our population growth curve.
Second, a sale of both CCOs would give Council some debt-to-revenue freeboard by removing their capital requirements from Council's books, which I am advised could be as high as 25-30 per cent of Council's indebtedness.
Commercially, if both became listed companies (with Council possibly retaining a share holding), a market-led opportunity would be created for them to invest and expand without the constraint of impacting Council's books.
Ports of Auckland would be released to grow to the scale it is likely to require to be a serious investment prospect to relocate, if and when the feasibility study on where that relocation might be to is completed.
We need only look at the success of Tauranga's port since it was partially privatised and listed some years ago. It has grown from a small provincial port to be NZ's largest, worth $2.2b, twice the value of Ports of Auckland.
Similarly, a commercialised Watercare would be better positioned to independently debt fund an accelerated and badly needed capital expenditure programme required to cope with Auckland's population and housing growth.
A dramatically accelerated effort by Council and Government working together to address Auckland's critical transport issues is what we all want. Here's is a way to make it happen.
