Mayor Wayne Brown proposes 'Auckland Future Fund' to help stem rates hikes

12:45 pm on 29 November 2023
Ports of Auckland

Ports of Auckland. Photo: RNZ / Kymberlee Fernandes

Auckland's mayor is proposing a $3 to $4 billion regional wealth fund, created from leasing the port and transferring the remainder of its Auckland Airport shares.

The Auckland Future Fund would go to public consultation, but mayor Wayne Brown wanted to be clear: "The port is not for sale, but I do think a temporary lease of its operation is worth considering."

At least $1 billion of the Auckland Future Fund would make provision for climate change risks through self-insurance, saving Auckland Council almost $25 million in annual insurance premiums.

During the current financial year, Auckland Council's property insurance costs have risen more than 44 percent.

Once fully capitalised, the proposed fund would also help mitigate rates rises for Aucklanders by mandating it to achieve a return of at least 7.5 percent, of which the council would receive a minimum cash return of $180 million, or around 6 percent. This would generate greater non-rates revenue that would help offset rates increases.

Wayne Brown at the launch event of the Moana Auckland festival on 8 November 2023.

Wayne Brown. Photo: RNZ / Felix Walton

Any surplus would be reinvested in the fund to preserve and grow its capital, and protect the value of the council's intergenerational assets so they continue to benefit future generations.

The fund would be designated a strategic asset under Auckland Council's Significance and Engagement Policy, protecting it from divestment for short-term gain, but leaving fund managers free to trade.

KiwiRail chief executive Peter Reidy said any potential new port operator would understand the needs of freight companies.

Once the Eastern rail link was complete, KiwiRail planned to double the amount of containers it was able to move from the port, he said.

Speaking to Midday Report, deputy mayor Desley Simpson said the proposal could lead to a better financial future for the city.

"It would potentially bring us more income, and it would give us less reliance on the likes of our rates income, because we're very conscious of that for Aucklanders.

"But also reduce our risk, and that's really important as a council, by diversifying our markets."

The multibillion-dollar regional fund would give the city a better return than its other assets, Simpson said.

The Maritime Union said, in a statement, the ongoing uncertainty around the port's future, caused by the mayor, was "a threat to the economic stability of Auckland City and New Zealand".

National secretary Craig Harrison said the Port of Auckland had to remain in public ownership, saying privatisation would result in "massive price hikes".

Maritime Union national secretary Craig Harrison at Lyttelton Port.

Craig Harrison. Photo: RNZ

He pointed to research by the University of New South Wales last year, which found privatisation of Australian ports via long-term leases had resulted in "excessive profits" for leaseholders, paid for by the Australian public.

"It will be worse than the chickens coming home to roost if we hand over the port to an outfit like this - it will be the vultures coming home to roost," Harrison said.

The union believed there was "no feasible alternative" at present to the current arrangement and location, "with other ports operating at capacity, and lack of infrastructure to move freight to Auckland from other ports".

"Any major changes to port location or the supply chain would be a multibillion-dollar, decades-long process, requiring central and local government coordination, including coastal shipping and rail links.

"Put simply, the current value of the Port of Auckland as a trade gateway for the country far outweighs its value to the council as a one off cash injection."

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