Divided Christchurch council says no to asset sales

Wednesday, 13 December 2023

Selling Christchurch’s assets is off the table following a close vote, tense debate and impassioned pleas from the public.

The city council on Wednesday decided not to proceed down a path which could have paved the way for the partial or full sale of assets like Christchurch Airport and Lyttelton Port.

The council’s investment company, Christchurch City Holdings Ltd (CCHL), had asked the council to let it take over control of the assets in a bid to increase dividends for the city by an estimated $450 million over 10 years.

The council voted eight to seven not to develop a business case to cede control of assets to CCHL, which oversees $5.8b worth of city assets.

The decision was met with a standing ovation and cheers from a gallery packed with people opposed to asset sales.

However, councillor Victoria Henstock branded the decision “undemocratic” and said it “defied logic” not to carry out due diligence.

She repeatedly mentioned the additional $450m in additional dividends and the value that would offer the city.

Her speech was met with boos and jeers from the crowd, with one person yelling out that she was “twisting things”.

Cr Aaron Keown echoed Henstock’s concerns.

He said he wanted to let democracy speak and let the other 400,000 people of Christchurch not in the council chamber have their say.

A decision to proceed with the business case would have led to public consultation next year, before any final council decision on the future of the assets was made.

Council interim chief executive Mary Richardson said the council and CCHL had already spent more than $1 million on the strategic review. The business case work had already also started.

Mayor Phil Mauger said he was keen to progress the business case so the city could make an informed decision.

He said if CCHL kept going with the status quo it would “hit the wall in 2028” and the council would have to have “a fire sale” of its assets.

Later in the meeting Mauger repeated that message, and criticised councillors’ lack of business experience.

“Sadly we have got some people around here with little or no business sense making a decision. Some of them have never run a business.”

He was then drowned out by people in the gallery.

Cr Mark Peters said he hoped the council had enough common sense and wisdom to finish the business case process.

He asked the public gallery if they wanted to keep paying higher rates.

Many called out “yes”.

The council is predicting a 13.3% rates increase next year, 10.3% for the following year and 5.2% for 2026-27 - a cumulative increase of 31.5%.

A 13.3% rates increase would amount to an additional $448 on the rates bill a year, for the average property worth $764,364.

Deputy Mayor Pauline Cotter asked councillors not to continue to throw money and resources into something that would allow CCHL to “tinker, dilute, and sell off bits and pieces”.

She quoted phrases used by CCHL to explain what they would do if they had more independence from council - co-investment, recycle shares, allow dilution, create liquid assets.

“All of this involves selling portions of the portfolio, no matter what creative wording is used, [it is] selling off the silver,” she said.

Cr Jake McLellan said characterisation of CCHL as under-performing was wrong and harmful.

He said the council should not be progressing down a garden path the community did not want it to walk down and never expected it to wander down.

Councillors who voted in favour of progressing the business case were Aaron Keown, Victoria Henstock, Tim Scandrett, Mark Peters, Phil Mauger, Kelly Barber and James Gough.

Those against were Jake McLellan, Andrei Moore, Tyla Harrison-Hunt, Melanie Coker, Pauline Cotter, Tyrone Fields, Yani Johanson and Celeste Donovan.

Sam MacDonald and Sara Templeton did not take part in the discussion or vote due to a conflict of interest, as the pair are on the CCHL board.

CCHL chairperson Abby Foote said earlier this week that the board was not proposing large-scale asset sales, and that it was interested in growing the portfolio, not shrinking it.

However, those who addressed the council earlier in the meeting were concerned about what handing over control would mean for democratic oversight.

Nathaniel Herz-Edinger, of the Living Wage Movement Aotearoa New Zealand, said people were deeply concerned about losing democratic control of its assets, including the airport.

He said after the earthquake people just wanted its lines company Orion to get the power back on - people did not care about its balance sheet or dividends.

He asked the council if it was going to listen to the people of Christchurch or to consultants in a $2000 suit.

Former Christchurch mayor Garry Moore urged councillors not to give away the power and responsibility they have by selling assets.

He said councillors were subjected to a set agenda led by the former chief executive Dawn Baxendale and chief financial officer Leah Scales, who have both recently resigned.

However, he did say he supported the council going out to public consultation.

Moore urged the council to release all the information about CCHL and its companies that it had discussed in private.

“Let’s have the debate. It’s a burning issue and people love Christchurch and they love our assets.”