What options does Wellington City Council have left?

Thursday, 17 October 2024

Wellington City Council faces government intervention over its finances following a decision to abandon the sale of airport shares. The Prime Minister warns the situation could prompt an early local election. Stuff's Imogen Wells reports.

Join the conversation and have your say in the comments below.

The Wellington City Council is facing some big calls as it looks to rework its long-term plan but it has options up its sleeve – even if they are unpalatable.

The plan amendment was triggered by a vote last week to stop the sale of the council’s 34% stake in Wellington Airport. News of the needed amendment has seen the central government openly talking about intervention. That, at its most extreme, would see Local Government Minister Simeon Brown fire elected councillors, mayor Tory Whanau, and deputy mayor Laurie Foon and install a commissioner to run the show.

The move, according to Anne Tolley who was appointed to run the Tauranga City Council, would need dysfunction to reach a high level, she told The Post.

Wellington City Councillor Nureddin Abdurahman speaks to media before Wednesday’s meeting.

“To override democracy is extremely unusual and unique, and the law requires a really high test,” she said.

But it is a threat being taken seriously with an urgent meeting called at 2.30pm on Wednesday by Whanau in an attempt to save the long-term plan, which needs to be amended after the council voted to stop the sale of its shares in Wellington Airport. That vote, and need for amendment, is what has seen the Government openly mulling intervention.

Councillors Nīkau Wi Neera, Ben McNulty and Nureddin Abdurahman at last week’s airport vote.

There are, though, a number of options available to keep the government wolves away from the door. None will be palatable.

Assume more risk

Taking on more risk is the easiest answer – but one the city might eventually regret.

The reason for selling the airport shares was to set up an investment fund that could be drawn down to help the city rebuild after a major disaster. So, it was really taking money out of one investment (the airport) and putting it into another.

The Cuba St Oaks Complex is one of the council ground leases.

The council could just keep the money in the airport, not set up a fund, and the books would not take a hit.

But this could easily be seen by credit rating agency Standard & Poor’s as not being financially prudent, leading to a credit downgrade and more costly borrowing.

Sell something else

The planned Golden Mile revamp could be cut.

The airport shares were the biggest council asset, and the obvious one to sell, but not the only option.

The council has 63 ground leases – the land underneath buildings – worth $246 million.

It could sell these to set up a fund. It is a move that councillor Ben McNulty, who opposed the airport sale, is advocating for.

Stop spending

The Newtown cycleway got built but others could be cut.

Council staff originally said a no-sale of the airport shares would have no impact on council books, then said it would leave a $450 million hole, then revised that to being up to $600m.

Numerous councillors, it should be noted, are highly sceptical of the figures and are demanding more information.

Rates rises? Possible but political suicide.

But the no-sale call has played into the hands of the right-leaning faction on council, who have been trying to cut back on spending all through this term, and in the past.

Stopping the $139.4m Golden Mile project, jointly funded by Waka Kotahi, is possible but mayor Tory Whanau has said ditching the project is non-negotiable. She is, though, just one vote on council.

Cycle lanes, costing $111m in the coming decade, could also go. But for a Green mayor, with a Green deputy, and a largely pro-cycle council this could be a bitter pill. It would also leave a cycleway network only half done.

Probably the least-palatable cut would be stopping the multi-blowout work to strengthen the Town Hall, now costing up to $329m. But that would mean spent money being lost and leaving a half-built scar for Wellington to deal with.

They could also spend less on fixing the city’s failing water infrastructure. But with near unanimity around the council that fixing these issues is fundamental, it would be highly-unlikely.

Charge more rates

The council could increase rates. But, if that didn’t lead to a commissioner taking over, the effect would be the same.

Because, after years of big rates increases, culminating this year with an 18.5% increase (which really translated to about 21% for many), it would seem highly likely that any council voting for that would soon be voted out.

Online comments are moderated during working hours and may not appear immediately.