Auckland budget: Councillors with stake in airport can still vote on share sale

5:13 pm on 8 June 2023
Auckland Council meeting on sale of airport shares

The crucial budget meeting of the Auckland Council is underway. Photo: RNZ / Felix Walton

Auckland Mayor Wayne Brown has agreed to a partial sale of the council's airport shares, rather than selling the full $18m in shares, and is asking for a higher rates increase to get his budget passed.

Brown is now proposing to sell just over 8 percent of Auckland Airport shares, rather than the council's entire 18 percent shareholding.

Brown is calling for an average rates increase of 7.7 percent, up from 6.6 percent in his previous proposal.

"I have reflected by all the points raised by the counsellors," Brown said following several hours of discussion.

Brown said he has "compromised on every lever" with his budget, and there will be a shortfall with the partial sale which required cuts elsewhere.

"I believe this proposal is the best balanced, achievable, prudent budget," Brown said.

The council considered his budget today but adjourned its governing body meeting without reaching a decision on the annual budget. They will reconvene on Friday morning. Earlier, some councillors said they would need more time to consider the changes.

Just three councillors spoke in support of the mayor's proposal to sell all of the council's shares in Auckland Airport. In a preliminary discussion before a closed-door debate, the majority of councillors either opposed the sale or only supported a partial sale.

Andy Baker, Maurice Williamson and Desley Simpson told the mayor they would support his proposal to sell the council's entire 18 percent stake in the airport.

Alf Filipaina, Sharon Stewart and Julie Fairey said they were still undecided.

After a lengthy session where councillors gave their feedback, the meeting has adjourned and Brown will resume to present the latest version of the budget informed by the comments at 2pm.

"We still have to produce a balanced budget. We don't have the option of the government of just printing more money, we have to have a balanced budget."

Maungakiekie-Tāmaki councillor Josephine Bartley told the meeting she could not imagine selling an asset that brought in money for the city.

Councillors have settled in for a long session that began at 10am as they debate the mayor's budget proposal to plug a $325 million deficit. Meanwhile, three councillors who declared a stake in Auckland Airport will still be able to vote in today's budget meeting.

Watch Auckland Council's streaming of the budget meeting:

Councillors give feedback

Councillors are giving their feedback on the budget in an open workshop.

Manurewa-Papakura councillor Angela Dalton said the council had a responsibility to listen to residents and the airport was showing its worth.

"This is not the time to sell the car to buy the petrol," Dalton said, noting that council had faced harder budget calls during Covid-19. "It's going to be another hard couple of years."

Manukau councilor Lotu Fuli said the council should sell under-performing assets, but the council has not actually looked at all its assets and the airport is a solid earner.

"I'm of the view that actually it's not an underperforming asset. I've seen the price of that asset continue to rise through this whole process. At the start of this process we were told nothing was off the table," but the focus has only been on the airport, Fuli said.

North Shore Ward councillor Chris Darby said he was prepared to raise rates higher than the mayor's proposal. "I did put up a partial sell earlier on" on the airport assets, he said, and he was prepared to consider a sell of $500 million.

"We do need to really take a really robust process to understand the strategic values and strategic output of the airport."

Maungakiekie-Tāmaki councillor Josephine Bartley said the focus needed to be on the community.

"I feel like your budget was looking at a philosophical standpoint of what the core services of a council should be," she told Brown. "I believe that the core services of a council should be what serves the well-being of the city."

She said she felt like those services were being "held to ransom" over the clash on selling the airport shares.

"I do have affection for the airport shares because that brings us in $40 million a year. … I want us to look at the rest of the $70 billion assets that we have. I just cannot comprehend selling an asset that brings us in money."

Waitākere Ward councillor Shane Henderson said rates needed to be looked at. "I think we need to go higher on rates," he said, "Maybe 1 percent, maybe more."

"The initial proposal I called death by a thousand cuts," Henderson said of Brown's first budget proposal. "Let's move on from a conversation about cutting ... Let's talk about the city that we actually want to live in."

Henderson said asset sales keep being put forward and constituent feedback to him said it was time to move beyond that tactic.

Rodney Ward councillor Greg Sayers said feedback from the public was the largest in the super city's history, and 53 percent of it supported full or partial sale of the airport shares.

"I am wholeheartedly in support of keeping the residential rate increase at the low rate of inflation. This is because Auckland is in a cost-of-living crisis." Sayers said he also wanted to keep debt low and Mayor Brown was presenting a 'band-aid' budget to deal with the crisis.

"Auckland's still looking for the mayor to fix Auckland. Now is the time for bold and brave decisions" to get the council back to business, he said.

North Shore councillor Richard Hills spoke out about some of the decisions and his focus on reducing cuts to the community.

"I guess when I look at this budget, I don't like any of the levers. The cuts in the budget presented were rough. What the community told us, and I've never seen it happen before, 73 percent of those submitted told us they opposed some or all of the cuts."

Hills said the budget strife had been difficult. "I will admit this has been the hardest six months of my career. Even the cuts proposed still leave us with hundreds of jobs cut from this organisation."

He said a rise in rates would provide stability. "We will break our staff and our city if we do this again next year."

Councillors Chris Darby and Richard Hills

Councillors Chris Darby, left, and Richard Hills Photo: Supplied

Albany ward councillor John Watson said the asset sales should be a last resort, not a first resort. "What I feel has been lacking from this process is more of an investment perspective."

Watson said he was hopeful a balanced budget could be created without raising rates too high.

Fellow Albany councillor Shane Walker said that in his experience selling off the family silver did not make anyone happy. "We're not addressing the underlying financial issues and that is we're spending beyond our means."

Making cuts did not have to involve cuts in services, he said. "We can do better, and we can be more efficient."

Howick's Maurice Williamson said he felt the council was landed in a bad place and had to make the best of it without hurting ratepayers.

Maurice Williamson, candidate for Auckland Council

Maurice Williamson Photo: Getty Images

"It's been horrific for the poor old ratepayer ... so my priority for things is that we keep the rates near the rate of inflation or as close as possible."

Williamson said some of the comments being made were wrong. He said that the public do support at least some airport share sales. The airport "is not a strategic asset for this council in terms of investment", because it cost more than it paid.

"I'm very much in favour of selling any asset that is costing us more to keep than it is returning to us." He said that Auckland flood recovery was going to cost quite a lot more in the near future as well.

Howick councillor Sharon Stewart said she campaigned on reducing costs.

"I haven't heard very many people around this table want to make savings," she said. "If the rates go up any more, it's tipping people over the edge."

Waitematā and Gulf Ward Mike Lee said the mayor's proposal was basically acceptable to him, except for the airport shares sale. "I don't believe anyone in the room has a political mandate to sell the airport shares."

Lee said he rejected the logic that polling said some who strongly supported asset sales and those who said they might support it be lumped together to imagine a majority. "Asset sales is not financial prudence."

Albert-Eden-Puketāpapa Ward Councillor Christine Fletcher said since the super city's formation, debt has accumulated.

"We have left a legacy of debt and fear. The real lesson here should be how we tackle expenditure, not just selling assets."

Fletcher said many voted for the mayor because they wanted a disruptor to shake things up, but she said selling all the airport shares now does not sit comfortably with her. "I'm willing to see a small holdings sold if it means we can make progress."

Manurewa-Papakura Ward councillor Daniel Newman said that his priority in public office had never been only about developing an airport precinct, but bettering his constituents of South Auckland.

Waitākere Ward's Ken Turner said there was a productivity deficit which loaded administration on people's backs. People did not believe that they were going to get anything from the loss of the airport shares.

"I don't see why we need to use a $2 billion cork to fill a $325 million hole."

Albert-Eden-Puketāpapa Ward's Julie Fairey said she would not start from the current document to deliver her ideal budget. She said "a large rates increase" would actually be the best way to ensure stability, but she acknowledged there was little support for that.

"I'm not scared of debt because we use debt to fund capital investments." Fairey said she had received a lot of feedback from people saying they want to retain the airport shares.

Whau Ward councillor Kerrin Leoni said she agreed with the budget with the exception of the airport shares sale.

"Selling the airport shares should be the absolute last resort and therefore I'm suggesting we look at a small amount of additional debt."

"There are a number of other assets we should consider selling in the long-term plan."

Auckland Deputy Mayor Desley Simpson closed the debate by saying the city was still in a financial crisis. "Aucklanders deserve a budget that doesn't hurt too much."

Simpson said Brown's budget "pushes the limits" in some areas but also reins in the "awful" cuts Aucklanders were worried about and did not raise rates to an unsustainable high.

"I think you've actually settled on as good as it gets, considering." Simpson said selling the airport shares was the solution to the problems.

Stake holders allowed to vote

The three Auckland councillors who declared a stake in Auckland Airport will still be able to vote in today's budget meeting. Albany Ward councillor Wayne Walker declared a $3 million shareholding through a trust. Chris Darby and Julie Fairey also declared shares before the meeting.

Councillor Julie Fairey

Julie Fairey Photo: RNZ / Finn Blackwell

All three said the council's legal team concluded their shares did not cause a conflict of interest for their vote.

Fairey said she was in the process of getting rid of her shares, which were held by her husband, Minister Michael Wood who has been under fire for not selling them despite being asked 12 times by the Cabinet office to do so.

She said today's budget votes were the most significant decisions she had been a part of, and that she would participate in all items.

Brown proposed to fund local boards with $16m of savings, but it is not clear if he has the numbers from Auckland Council.

The funding of local boards would be contingent on the council selling its 18 percent share in Auckland Airport.

The budget negotiations have been marked by protests from the public and strife and insults between Brown and several councillors who oppose selling the airport shares.

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