dave August 23, 2020 No Comments
Tom Dillane

Tom Dillane is a reporter at the New Zealand Herald tom.dillane@nzme.co.nz@tomdillane1

A written proposal from the chair of Auckland Council’s planning committee for the Government to buy a 50 per cent stake in the Ports of Auckland has been released to the Herald today.

The four-page draft proposal from Auckland councillor Chris Darby outlines that “time is of the essence” as the city loses $65 million a day in lockdown two, and selling an interest in the ports is the most logical way to save council’s finances.

The original Covid-19 lockdown left a $750m hole in Auckland Council’s budget, and the city’s economy broadly is losing $65m a day during the second August lockdown.

“With the re-emergence of Covid-19 in early August, Auckland Council is now faced with even further reductions in revenue and is fast running out of options to progress already reduced work programmes while balancing its finances,” Darby writes in the proposal.

“My proposal to transfer a 50 per cent stake in POAL to Government ticks a number of important strategic boxes and is a win for Auckland and a win for New Zealand.

“With the re-emergence of Covid-19, the need to prepare has new urgency. It is unreasonable and unsustainable to expect being spoon-fed with government handouts.”

Darby says he considered three key moves to generate revenue from Auckland Council’s strategic assets: the disposal of part or all of the Auckland International Airport [$1.9 billion], the dissolution of public energy trust Entrust [$2.6b], or the disposal of part or all of POAL [$1.2-1.6b].

The four-page draft proposal from Auckland councillor Chris Darby outlines that
The four-page draft proposal from Auckland councillor Chris Darby outlines that “time is of the essence” as the city loses $65 million a day in lockdown two. Photo / File

But selling 50 per cent of the POAL, with an estimated worth of between $1.2 billion and $1.6b, was the preferred option because it would free up “significant capital for injection into future-ready projects” to respond to Covid-19, and be more politically feasible.

“I have purposely avoided the ongoing and eventually damaging inconsequential rearranging of council’s lesser assets in preference for a major transaction that more immediately and materially repositions council’s finances,” Darby wrote.

The councillor said he has informally discussed the proposal with Auckland mayor Phil Goff, the deputy mayor, the other council committee chairs, and three government ministers.

A spokesperson from the mayor’s office said it was the first time the mayor has seen the councillor’s formal proposal.

“The mayor has publicly stated previously that he is not in favour of the sale of strategic assets. Any such proposal would need to be considered by councillors through the normal council process,” the mayor’s spokesperson said.

A spokesperson from the mayor's office said it was the first the mayor has seen councillor Darby's formal proposal. Photo / File
A spokesperson from the mayor’s office said it was the first the mayor has seen councillor Darby’s formal proposal. Photo / File

However, the chair of the council’s finance and performance committee, Desley Simpson, said she was disappointed Darby had not properly canvassed his proposal with her.

But Simpson added she was aware of ideas circulating within council about selling POAL, as the council’s governing body begins consultation on its 10-year Long-Term Plan next week.

“I am disappointed councillor Darby hasn’t shown due respect to his colleagues by discussing his ideas in detail before taking them to the media,” Simpson said.

“These ideas aren’t unique to councillor Darby. Others have mentioned them before and it would seem unusual he would seem to take them as his own when he will be aware that other people have mentioned them before.”

Auckland Council's finance and performance committee chair Desley Simpson. Photo / File
Auckland Council’s finance and performance committee chair Desley Simpson. Photo / File

Deputy mayor Bill Cashmore also said he had not had detailed discussions with Darby about sale of the POAL, and felt it was “unfortunate” he had not produced a “more formal paper to councillors”.

“Councillor Darby and I did discuss several weeks back that there would be a need to have a long-term financial plan or strategy that may have to be by necessity something other than business as usual,” Cashmore said.

“Councillor Darby also bought something along these lines to a chairs’ meeting but with no detail to it.”

POAL chief executive Tony Gibson said any comment on the sale of the POAL should be left with its owners – Auckland Council.

Darby’s proposal specifically rules out an private investor in the council’s stake in POAL, stating that “would be politically unacceptable, for both council and Government, and likely be resisted by iwi and Aucklanders”.

The benefit of the Government owning 50 per cent of POAL would be aiding the post-Covid-19 “recovery of the Auckland economy without setting a precedent, which grant funding potentially could”.

Aside from the direct injection of substantial funds, for the council the transfer of ownership would remove half of the consolidated debt of POAL, which Darby says currently sits at $490m.

The original Covid-19 lockdown left a $750 million hole in Auckland Council's budget, and the city's economy broadly is losing $65m a day during the second August lockdown.
The original Covid-19 lockdown left a $750 million hole in Auckland Council’s budget, and the city’s economy broadly is losing $65m a day during the second August lockdown.

Employers and Manufacturers Association chief executive Brett O’Riley – also a former chief of council CCO Auckland Tourism, Events and Economic Development – endorsed Darby’s proposal.

“From our perspective we would be pleased to see Auckland Council do this. It’s something we have called on for a long time,” O’Riley said.

“We supported the average 3.5 per cent rate increase because we recognised there is a significant amount of infrastructure both to be maintained and developed by Auckland Council and its entities in Auckland, which is part of Auckland’s long-term plan.

“Auckland’s only going to continue to grow so we have to find ways of injecting more capital into Auckland Council’s activities. Clearly during Covid-19 it’s a hard call to make. But at times like this we have to make some hard decisions.”

The Ministry of Transport has been contacted for comment.

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