Council stakes in Auckland Airport
April 22nd, 2010 at 9:00 am by David FarrarAlasdair Thompson writes in the Herald:
Auckland Airport is issuing more shares to fund its purchase of airport company shares in Cairns and Mackay, Australia, and the mayors of Manukau and Auckland say their councils will use ratepayers’ money ($28.66 million) to buy their extra allocation of them.
This means that every ratepayer in Auckland and Manukau has been forced to fund a speculative investment in two Australian Airports. Madness.
I asked Mr Brown about this recently, and his answer was he wants Manukau city to control the airports shareholding because it’s a “strategic” asset. He quoted a former Manukau mayor, who apparently used to say “it’s a licence to print money”. He made no attempt to compare the return on his ratepayers’ investment in the airport with the returns or benefits from investing in risk free core public infrastructure.
John Banks agrees with Mr Brown. He too wants his council to buy more shares in the airport to keep its level of control over the airport’s ownership. Mr Brown’s subtext was that most of the people who will vote for him like public ownership of businesses such as airports and ports and don’t like private ownership of them.
But this is like saying most people don’t like private ownership of businesses, even though it is business that provides the jobs, products and services, and dividends and taxes that pay for the jobs and services of the public sector. We say that where the private sector is happy to take on risk let it do so and let government regulate monopolies and control of “strategic” assets.
Could not agree more.
Related posts:
- Why Councils should not own airport companies
- Auckland Airport Sense
- Auckland Airport Shares
- More on Auckland Airport
April 22nd, 2010 at 9:22 am
I seem to remeber that Banks in his first term sold a lot of Airport shares to pay off debt which he seems to have reversed his position on. Maybe related to the fact that the shares increased hugely in the years after he sold them.
Vote:I have no issue with them holding their original shareholding but I am against them taking up any further investment – share speculation with ratepayer money is not what they are there for
April 22nd, 2010 at 9:35 am
kevin_mcm: keeping their existing holding is only attractive because it is the status quo. If we think the councils should own some shares, why not all of them? If we think they shouldn’t buy more shares, why shouldn’t they sell the ones they already have?
Vote:April 22nd, 2010 at 9:52 am
“I have no issue with them holding their original shareholding but I am against them taking up any further investment – share speculation with ratepayer money is not what they are there for”
This sentence makes no sense. It’s an incredibly poor use of ratepayer money.
D’oh I’m making the same point as PaulL
Vote:April 22nd, 2010 at 10:15 am
Well, there is an opportunity then to sell council utilities to private providers- and then to buy a stake in those companies?
Vote:April 22nd, 2010 at 10:34 am
In Auckland’s case at least it is no different from buying the Port Company shares 100%. The real attraction of these “old” utility companies is the landholdings and land-use rights that they hold. Witness th esell-off of railway land after NZR was sold off.
AIAL is more a property developer and landlord than an airport operating company. Planes are only an excuse for the other activities.
Vote:April 22nd, 2010 at 10:42 am
“In Auckland’s case at least it is no different from buying the Port Company shares 100%”
Which was driven by that old socialist Mike Lee through ARC.
Vote:April 22nd, 2010 at 1:44 pm
[DPF]:”This means that every ratepayer in Auckland and Manukau has been forced to fund a speculative investment in two Australian Airports. Madness.”
A 100% council-owned Auckland Airport would not be attempting to buy other airports in Australia. I’m just saying…
Vote:April 22nd, 2010 at 9:30 pm
While I agree that private ownership of business is generally a good thing, public ownership of strategic assets should endure.
See the run-down electricity, telecommunications and airline networks for examples of why out-and-out private ownership doesn’t work in the best interests of the country.
Ostensibly, it seems that the councils are simply maintaining their position wrt airport ownership but who knows how much backchannel there was between the airport company and the councils before this announcement.
Personally, I am happy with the councils supporting investment in other airport companies. They are familiar territory for AIAL and the tie-ups can only lead to operational advantages for New Zealand vis-a-vis preferential handling for New Zealand-bound flights leading to a more attractive holiday destination package. And as has been said, airport companies are money-spinners; they are the only sector of the aviation industry that makes anything in the long term.
I would not be happy with this if it were to fund investment in say fisheries or clothing manufacture and I doubt AIAL would approach the councils with such a plan.
Vote: