Sale of Ports of Auckland no quick fix to city's Covid-19 financial woes. Photo / Michael Craig
Sale of Ports of Auckland no quick fix to city's Covid-19 financial woes. Photo / Michael Craig
Auckland ratepayers might have to be tapped to replace loss of a dividend from the Ports of Auckland if it went out of the city's ownership, says Mayor Phil Goff.
The dividend represented a future revenue stream "that would otherwise have to be recouped through rates or via other sources", Goff said in response to Herald questions about the council's Covid 19 emergency budget.
The questions were put to the council before the emergence last week of a draft proposal by councillor Chris Darby, chairman of the council's planning committee, for the Government to buy 50 per cent of the Ports of Auckland.
But the mayor's responses suggest any proposal to sell shares in the port company (POAL) - either outright or through a sharemarket listing - will not sit well with him.
"While the emergency budget provides for the potential sale of up to $224 million of surplus property and land, there is no provision for the sale of strategic assets," said a response from his office.
"Furthermore, any disposal of POAL would require a long-term plan amendment process with public consultations. There are no current plans therefore to list POAL on the NZX.
"Selling shares in the port, even if council wanted to take this step - which it is not planning to do - would make no sense in an environment where the future of the port is unclear.
"Uncertainty would impact heavily on the value of the asset. Additionally, the port normally returns a dividend to council which represents a future revenue stream that would otherwise have to be recouped through rates or via other sources."
Goff's reference to the dividend loss was despite the port's interim results confirmation on March 2 - before the first Covid 19 lockdown - that it would not pay a first-half dividend and expected to pay much smaller than usual dividends until 2022, while it ramped up spending on automating processes.
The port's profit fell to $17.2m in the six months ended December 31, down from $24.4m a year earlier. Revenue was flat at $123.2m.
The first lockdown left a $750m hole in Auckland Council's budget and the city's economy is estimated to be losing $65m a day during the August lockdown.
Darby said selling 50 per cent of the port, with an estimated worth of between $1.2 billion and $1.6b, would free up significant capital for injection into future-ready projects and be more politically feasible.
Auckland Mayor Phil Goff. Photo / Michael Craig
The councillor said he had informally discussed the proposal within the council and with Goff and three Government ministers.
Goff's office in response to Darby's proposal said the mayor had publicly stated previously he did not favour the sale of strategic assets. Any proposal would need to be considered by councillors through the normal council process.
Before Darby's proposal, the Herald had asked if the debate around the port's future location, fuelled by recent Government-commissioned reports which variously suggested it be moved from Auckland's CBD waterfront to Northland, Manukau or the Firth of Thames, had devalued the asset's value when the council needed it most in Covid emergency budgeting.
The Herald also asked if the council had considered listing POAL again on the NZX, or leasing it out. The port was listed until the former Auckland regional council acquired all the shares, which in turn were vested in the Auckland Council.
The response said any decisions about the future of the port "must have regard to the role of ports in the upper North Island. A solution must work for Auckland, the upper North Island and New Zealand".
"The mayor supports the Government's decision to investigate further options around the eventual relocation of the port. He expects that, following the election, the Government will start work on a facts-based options analysis of the Manukau or the Firth of Thames, as identified in the Sapere report and the 2016 Port Future study.
"The mayor has advocated for this. This must be properly engage with stakeholders, in particular Aucklanders and Auckland Council as the exclusive owners of the port.
"While the mayor supports a medium-term relocation of the port to free up prime waterfront land for greater public use, it has to be done in a way that will not disadvantage our people or businesses and that will provide the maximum benefit to our city,"
