Airport shares sale going to extraordinary meeting
Monday, 16 September 2024
The Wellington City Council is calling an extraordinary meeting over its controversial airport share sales – and this make-or-break vote again comes with dire warnings if the deal dies.
Emails seen by The Post show council chief executive Barbara McKerrow has agreed to the extraordinary council meeting on October 10 for consideration of councillor Nureddin Abdurahman’s notice of motion, aimed at killing the sale of the council’s 34% stake in Wellington Airport.
Abdurahman on Sunday confirmed it was the make-or-break vote, that it would likely end the sale, and that it would mean an amendment to the council’s recently-adopted 10-year plan. The change would need to go for public consultation.
Staff would argue against the sale saying “the sky is falling down”, rates and borrowing would have to increase more, and projects would have to be scrapped but “we know that is not the truth”, Abdurahman said. He argued the airport sale money was only ever going to be used to invest elsewhere and was not going to be used to reduce rates or pay off debt.
Abdurahman’s notice of motion was signed by him and eight other councillors. The sale can only now be saved if one of those nine switches sides. The council has 16 voting members.
The council wants to sell its airport shares and use the money to set up a perpetual investment fund to help the city back on its feet after a major natural disaster but the sale has faced staunch opposition from many on the left, opposed to asset sales, and right-leaning councillors who don’t trust the council will save the money for its intended purpose.
Council staff, before the May vote to sell, warned that the council’s entire 10-year plan was based on the assumption of the sale, a no-sale would mean a lot of the planned spending would have to go back for public consultation, and not selling could affect the council’s credit rating.
“[Credit-rating agency] Standard & Poors (S&P) in their latest report to us did note they would be looking at Wellington City Council’s outlook or credit rating if council changes its financial strategy,” council chief financial officer Andrea Reeves warned councillors in a May briefing.
The council narrowly agreed to the sale but S&P this month downgraded the credit rating anyway – a move Mayor Tory Whanau said was expected.
S&P’s latest report warned it could further lower its rating of Wellington City. The assumption it was working on was that the council would increase rates by “more than 10% a year over the next three years to support budgetary outcomes”.
“We base our financial forecasts on the financial strategy outlined in the [long-term plan],” the report said. “This includes large property rate increases and the sale of the council's 34% state in Wellington International Airport.”
Councillor Tim Brown, a supporter of the airport share sale, said the recent credit rating downgrade did not affect the cost of borrowing for the council. The council almost-exclusively borrowed from the Local Government Funding Agency.
However, the agency would increase the interest rate to the council if S&P dropped it down a notch again. Each notch down from here (AA) would cost the council an extra $1m a year in interest, Brown said.
“The councillors who are opposed to the establishment of the investment fund fall into two camps. Those fighting the ghost of Roger Douglas … and those who claim that supporting council doing something prudent with its investments will allow it to increase its borrowing,” he said.
The sale was always down to come back for another vote in December but the notice of motion sped that up.
Councillor Diane Calvert, who signed the notice, said bringing it forward was in the best interests of the city.
“Any small additional administration cost is far outweighed by the consultants’ costs being charged because the organisation fails to recognise that a majority of elected members and public no longer wish to proceed with the sale,” she said.