5 Dec 2023

Asset sales not the solution to council debt - local government scholar

7:06 am on 5 December 2023
Low fog delays and cancels flights at Wellington Airport Tues 21st Jan 2020.

Wellington City Council has proposed selling its stake in the city's airport. It is one of several large councils around the country considering selling their shares in local assets. Photo: RNZ / Patrice Allen

A local government scholar says asset sales are not the answer as major councils try to balance their books.

Last week, Auckland mayor Wayne Brown revealed he wanted to lease the city's port, following on from the sale of 7 percent of the council's Auckland Airport shares.

Wellington City Council has also proposed selling its stake in the city's airport, while another airport owner, Christchurch City Council, has flagged serious financial issues - though it has not proposed selling its key assets.

University of Technology Sydney scholar Andy Asquith, said when comparing councils to private companies, councils' debt levels were low relative to their asset portfolios.

While short-term cash may look appealing, selling assets was not the answer to paying down debt, he said.

"Many of the assets produce an income stream," Asquith said, highlighting the financial benefits delivered to councils by Port of Auckland, Auckland Airport and Christchurch Airport.

"What you get is a one-off capital hit from the sale of the asset, and that's it.

"What I would say is politicians - irrespective of what flavour they are around the world - have got a very good track record of selling assets and then basically blowing the money away."

Asquith said the current state of councils' public finances was a demonstration that "no one has paid much attention to this important issue for a long period of time".

He said the last time local government finance was extensively examined was during the Helen Clark government, when the Shand report, named after its chair David Shand, was published.

Asquith said the report had more than 90 recommendations, but it was not prioritised as it was close to the 2008 election, which Labour lost, and the new government did not follow through on the bulk of the recommendations.

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