Viewpoint – Asset sales deja vu

This year there was a lot of talk surrounding Auckland Council’s budget  – “sell the airport shares or face massive rates increases and cuts to services’’ was the battle cry trumpeted far and wide. 

In reality selling the shares was the “…easy, lazy option” as councillors were told by an investment specialist (his words not mine) – “sell them all, or sell some and watch that debt climb right back up again.” He’d seen it all before, as have I.

What wasn’t talked about, was at the budget meeting itself a group of eight councillors put up an alternative budget: (a) preventing the sale of any airport shares (b) keeping the rate increase at 6.8 percent (lower than that eventually passed) (c) restoring cuts to local boards and Kauri Kids and (d) increasing short term debt to allow the Long Term Plan process the chance to confront the very real structural changes required to address the ever-expanding hole between revenue and spending.

These recommendations, however, were voted down…twice! This was due to pressure to sell the airport shares no matter what, as quickly and as many as possible. This is exactly what bureaucrats have been attempting to do since 2021 (when they were summarily dismissed by Phil Goff – a man not exactly averse to selling off public assets but even he drew the line at the airport shares). 

It’s also what’s happened previously with other income earning funds like the $335m Diversified Assets Portfolio gifted (like the airport shares) and disposed of entirely within 18 months. Similarly the disestablishment of ACIL, the independent investment CCO that produced record returns from council investments. They got the chop and the assets returned to Finance and Treasury to be systematically sold down.

Now the first 7 percent parcel of airport shares will go, despite the fact from 2011 to 2019 airport shareholder returns increased from $70 million to $2.471 billion – an increase of $2.4 billion in shareholder returns to council made up of capital growth and dividends in just eight years ($586m since last year alone)! No wonder there’s no shortage of buyers lining up to get their hands on them, “… a rare, high quality infrastructure business” as brokers say. 

The sale of our most valuable asset should have been a last resort. Instead it was the first – an easy way out that serves only to repeat the ‘debt, rating and asset sale’ cycle a little while longer without any attempt to address the much harder task of cutting costs while delivering the same or similar services. 

“Fool me once, shame on you; fool me twice, shame on me,” the old saying goes. At Auckland Council however, we continue with the same failed policies even though in 2023 we’re almost at endgame, with only the balance of airport shares and Ports of Auckland left (and maybe some golf courses). If they go, then that’s it, there would be nothing left, job done in little over a decade. The Barbarians will have sacked Rome.