Council given stark warning on what happens if they don’t sell airport shares

Thursday, 23 May 2024

The Wellington City Council owns a 34% share in the airport.

Wellington City Council staff have delivered councillors a stark warning of what happens if they do not agree to sell the council’s airport shares.

The Wellington City Council is proposing selling its 34% stake in the airport in this year’s long-term plan to set up an insurance fund which could help the city in the event of a natural disaster. The city council is under-insured by billions and its main financial asset, the airport, would likely be worthless in the event of a major earthquake.

Councillors, who are considering selling the council’s $278m airport share, were called to a briefing on Thursday led by council boss Barbara McKerrow and chief financial officer Andrea Reeves.

Council chief executive Barbara McKerrow has delivered a stark warning if the council voted for no sale.

Councillors were warned that a non-sale could trigger a drop in the council’s credit rating (meaning increasing borrowing costs) but threw the entire long-term plan time frame into risk.

The change in finances would be so notable that capital projects, already consulted on in the council’s long-term plan, would have to go back to public consultation, staff warned.

Reeves warned the council was under significant financial strain, with a growing rate of under-insurance and insurance costs soaring. Selling the airport and putting the money in a perpetual fund to help the council after a disaster would help mitigate that.

The council also had a notably under-diversified portfolio, with the airport the biggest portion. The council could look at a partial sale of its shares, with some – but not all – mitigation reduction.

Thursday’s briefing comes after recent polling commissioned by Unions Wellington and run by polling company Community Engagement, found that 74% of residents opposed selling the shares.

Unions Wellington spokesperson Sabina Rizos-Shaw last week said the result sent a clear message that councillors should “put an end to this unpopular and misguided proposal”.

“Public ownership is important because it gives our city a say on the future of the airport, something that is more critical than ever as we face the challenge of climate change.”

The telephone poll asked 1374 people: “Do you support or oppose the Wellington City Council’s plan to sell its 34% public stake in Wellington Airport?”

About half of respondents (51.4%) said they would be less likely to vote for their local councillor if they voted to sell the airport shares.

The majority of respondents were opposed to the sale of airport shares regardless of which political party they supported, with the exception of ACT (31% opposed). Labour supporters were most likely to be opposed (86%), while National supporters had the slimmest majority of opponents (63%).