Mayor Wayne Brown’s ‘predetermined’ decision on selling Auckland Airport shares criticised by councillors

Auckland Mayor Wayne Brown warns failure to sell the airport shares will force rates up. Photo / Michael Craig

Auckland councillors have criticised Mayor Wayne Brown’s “predetermined” position on selling the council’s airport shares, part of his draft budget, without first considering public submissions on the proposal.

Brown penned an open letter today, outlining his belief the council must sell its shares in Auckland International Airport Limited (AIAL) to avoid higher rates rises and more budget cuts.

Public submissions on Auckland Council’s draft budget closed last night. The budget proposed service cuts, fee increases, axeing public events and boosting disaster-response funding.

Community consultation had shown some cuts were unpopular, Brown said. Selling airport shares was also proposed in the budget.

Brown said: “Failure to sell the airport shares will force a hard rate rise and hard cuts everywhere, which as mayor, I certainly don’t want.

“Some [councillors] are suggesting debt increases as a way out, but... that is foolish, especially now when interest rates are heading up,” he said, citing City Rail Link cost blowouts and storm damage.

Auckland Mayor Wayne Brown has penned an open letter outlining his belief the council must sell its airport shares to avoid higher rates rises and more budget cuts. Photo / Brett Phibbs

Early in his mayoralty, Brown said he couldn’t rule out selling the city’s $1.91 billion stake in AIAL to help plug a $295 million hole in his first budget.

Although the council holds more shares than any other owner, it doesn’t have a controlling interest and is not represented on the board. Last December, the council’s chief financial officer Peter Gudsell told councillors that despite the “strategic” definition of the shares, there is no sense in which council exercises “strategic” ownership. Gudsell explained it is “simply a financial investment”.

But several councillors told the Herald they would read through public submissions before making a decision and criticised Brown for not taking into account what residents wanted.

“I won’t be ignoring those [submitters’] views and jumping to ill-informed conclusions. I will be giving due weight to the analysis of this remarkable public response, including their views on airport shares,” councillor Chris Darby said.

“Just yesterday consultation closed on the mayor’s controversial draft budget. A record 30,000 submissions have come in, with staff now in the process of compiling and analysing the feedback of Aucklanders.

“While it appears the mayor has predetermined his position on the merit of council’s $2.35b stake in the Auckland Airport monopoly, I haven’t.”

Councillor Alf Filipaina, a vocal opponent of selling the airport in the past, said he would also prefer to go through the submissions before making his decision.

Auckland councillor Alf Filipaina has expressed opposition to selling the council’s stake in the airport. Photo / Ricky Wilson

“He [Brown] has put his view in already. After consultation, we’re supposed to be listening to everybody. But he’s stated his position already,” Filipaina said.

“That’s a bit of a shame. All of us are supposed to have open minds but he’s put his position in there now.

“I am on the record saying I don’t support selling the shares, but at least I’m going to consider those [submissions] before I end up making any call around where my stance will be.”

Filipaina said while his view may not change after considering the public’s feedback, it was a “courtesy” to look through them before making a firm decision.

Deputy Mayor Desley Simpson, however, backed Brown’s view. She believed selling shares in AIAL to keep rates rises low and avoid service cuts was sensible.

“We’ve got to be very conscious of the final rates for Aucklanders,” Simpson said.

Deputy Mayor Desley Simpson backed the mayor’s view, saying selling council's airport shares to keep rates rises low and avoid service cuts was sensible. Photo / Jason Oxenham.

“We have to come up with a balanced budget. We’ve only really got four big [financial] levers. We’ve got rates, debt, assets like these [airport] shares, and savings [from service cuts].

“I don’t know what the results [of consultation] are, but the people I’ve spoken to don’t like this budget by way of some of the things that the savings want to cut, and yet, if you’re going to try to help save some of those things, you need to pull another lever some other way,” she said.

Simpson said she wanted to protect services from being cut and selling airport shares was the only option.

“We already know inflation is doing its thing, we’ve got cost of living problems out there for people, so, you know, this is not the time for a gigantic rate rise or more debt.

“So, what have we got left?”

Simpson agreed with Brown’s suggestion owning shares in the airport was not beneficial for Aucklanders.

In his letter, Brown said owning shares, which he said cost council $240m in interest payments over the past three years and didn’t return a dividend, was “just stupid”.

“So why do some councillors not get this? The airport returns have never met the costs of owning the shares and never will, so it is a lousy investment for debt-burdened ratepayers.”

Investment in the airport was better suited to long-term shareholders such as pension funds rather than the council, for whom “costs in must meet costs out with rates and debt to balance things”, Brown said.

Simpson said she would think twice about her decision if AIAL was more profitable and returned a dividend to the council.

“If I thought I was taking away something that would bring in long-term benefits, you know I might be a bit more cautious. But it has to be a huge return, and it’s never been that big for it to break even, let alone be profitable.

“I think it’s the easiest and quickest lever to pull and that’s the other big thing, you know, we have to make this happen, it’s an annual plan. It has to be good to go and ready to pull off on July 1.”

Brown also rubbished suggestions the airport was a strategic council asset and selling shares in it would threaten jobs.

“It [the airport] was labelled as ‘strategic’ which it probably is in terms of Auckland needing an airport but owning the shares is anything but strategic,” Brown said.

“The airport can’t be picked up and taken away. Baggage handlers and all the other airport trades will still be needed whoever owns those shares so emotive nonsense about protecting jobs is just unhelpful.”

AIAL shares closed at $8.80 on the NZX on Wednesday.