Charles Sturt: Public wants facts on airport funding

By Charles Sturt, Rotorua district councillor

1 comment

Many, many questions have been asked about the funding of the airport.

While the mayor has put what the situation is today he is right, but the amount coming from operations was supposed to be funding the capital and debt servicing costs that we were told would not be needed as other funders would front with the capital in the first place and they didn't.

When the proposal and costings for strengthening the runway were provided to councillors of the day it also included estimates for the cost to extend the runway for international flights.

Several of us councillors were sceptical, but the mayor assured us that NOT A DOLLAR OF RATEPAYER FUNDS would be required to fund the capital or the operation of the airport.

When the Airport Board and senior management at the council realised the capital improvements were going to look unfavourably on the airport books and after the council bought the shares from a private investor who incidentally didn't want to spend a cent on asset development or improvements, it was decided after many reports about tax credits, etc, to bring the capital into Rotorua District Council accounts.

When the justification for extending the runway was put before us we were told by the mayor and CEO that two cornerstone funders - ie the Bay of Plenty Regional Council and RECT - would fund all that was required to go international as they saw it as a regional strategic asset.

They put before us funding streams and it was projected that we needed about eight flights a week now to break even.

It was interesting that the airline, which is now the only carrier into Rotorua from Sydney, was the only airline company to oppose our resource application.

Cr Searancke and I asked what Plan B was, if the funding did not come to pass - we were told not to be negative, that the funds will be almost assured.

Well, as history now shows, none of the funding came to pass.

We had committed and construction was under way. In August prior to the last election in 2009 the mayor and CEO were advised by the Airport Board and its CEO there were some serious issues facing the airport including payments for the trees and legal accounts that were owed by the Airport Company.

This became apparent after the election and we established the Rotorua Grow fund. When it became apparent that the Rotorua District Council was short of almost $4 million to pay the interest on the capital for the runway that fund seemed to disappear.

Then a joint marketing approach between the Rotorua District Council and the Airport Company was struck to the value of approx $1.5 million to ensure the flights continued and the marketing by Air NZ in Sydney and by the council was evident.

This is when Councillor Searancke made the comment, which was widely reported at the time, that the airport company was virtually insolvent.

Interesting that the operational side and the assets side has been split, but I understood in the last detailed report that operationally after lease and other payments and retained earnings there was approx $50,000-$100,000 pa excess in the airport accounts.

These are public documents and maybe you could ask for a detailed copy and, if denied, under the Information Act, or just get a hold of the annual accounts and you show me where there is an income item to the Rotorua District Council from the airport for more than $700,000.

What the public want are facts not SPIN.


- Rotorua Daily Post

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