Christchurch Council considers partial privatisations

August 5th, 2014 at 2:00 pm by David Farrar

The Press reports:

Ngai Tahu is expected to be one of the partners invited to take a stake in the cash-strapped ’s commercial and investment arm.

The council is considering releasing up to $400 million in capital from Christchurch City Holdings Ltd (CCHL) as part of a plan to reduce its funding shortfall, which has been calculated by investment bankers Cameron Partners to reach up to $883m by 2019.

CCHL owns 75 per cent of Christchurch International Airport and is also the majority shareholder in the Lyttelton Port Company and Orion.

It also owns City Care, Enable and Red Bus Ltd.

The irony is huge. as a Labour MP campaigned against partial privatisations, yet as Christchurch Mayor she may implement the same policy at the Christchurch City Council.

It is the obvious thing to do. When you have huge debt, then a reduction in assets to offset debt is preferable to rate increases of 20%+.

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28 Responses to “Christchurch Council considers partial privatisations”

  1. burt (8,238 comments) says:

    You know the rules DPF – It’s different when Labour do it !

    It’s OK to say the sky will fall if [xyz] happens while in opposition then to do it yourself when in office if you are a card carrying Labour member.

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  2. dirty harry (456 comments) says:

    I wana know why we are in this mess for starters. Why was the city so under insured. Who was responsible for that? It smells of that bastard Marriott to me. Bloody councils and their grandiose schemes. Why should we have to sell down our holdings. They belong to me as a ratepayer. I want somebody held to account for this mess first before we start carving up our bloody assets.

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  3. Jack5 (5,053 comments) says:

    No problem with Ngai Tahu buying into the investment arm, and even picking up their first and second rights if the Government offers to sell its minority stake in Christchurch Airport.

    However, they definitely should begin paying company tax if they do this.

    It would be grossly unfair if they were to continue to be free of tax under the tribe’s group charity status.

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  4. burt (8,238 comments) says:

    I was wondering if the same people saying we need to urgently raise cash were saying a few months ago that ratepayers ( and tax payers ) could afford to rebuild the Cathedral ?

    If so perhaps it’s worth demonstrating that these people routinely just say what they think people want to hear so they get elected.

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  5. YesWeDid (1,048 comments) says:

    ‘The irony is huge’

    I don’t think the government was forced to sell its assets because it was unable to borrow any more money or was faced with a 20% rise in taxes.

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  6. anonymouse (710 comments) says:

    Although I get the feeling they are about to strip the port company, – which is sitting on a $400 million insurance payment,
    They have done a deal with Otago for their 15% and will acquire the rest and delist it,

    This is text book local body financing, force out the independents, get it off the market and use it as a financial plaything as you have 100% control,

    The last time this was done was in 2005 when the Auckland regional council took over Ports of Auckland and then they stripped $500 million out over the next 4 years, ( until they had to recapitlaise it in 2009)
    http://www.stuff.co.nz/business/2479929/Ports-of-Auckland-debt-sparks-capital-injection

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  7. cricko (303 comments) says:

    Is this the same Lianne Dalziel that was forced to resign from Helens cabinet when she was proved to
    be a liar ?

    Kinda just typical of the left as always, personal honesty and integrity are values just for fools, these are qualities
    subject to change, depending on how the wind is blowing. Most socialists accept that as fact.

    The Peoples Republic of Christchurch are welcome to her.

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  8. Jack5 (5,053 comments) says:

    Local control with minority private investment works extremely well at Port of Tauranga. Everyone benefits. But it needs a stable local body investor happy to leave port management well alone.

    I’m not sure a Labour-leaning Christchurch City Council could keep its hands off sufficiently to allow this type of arrangement to succeed as well as it has at Tauranga. Not only worker interests but also Green interests (any bitching by Lyttleton residents about coal loading or noise of round-the-clock operations, for example) may come into the picture.

    Nevertheless, the privatisation of Port of Lyttelton may be preparing the port for refloating in some structure similar to that of Port of Tauranga. Or perhaps the Christchurch City Council is preparing to sell part of the port to Ports of Auckland. That would not help!

    The financial and strategic advisers are in the picture, and that probably means there will be some ticket clipping by the financial community during any restructure.

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  9. Hugh Pavletich (192 comments) says:

    It is regrettable today’s lead article in The Press was not incorporated within the post … as this clearly illustrates a major restructuring of the Christchurch City Council is underway …

    Council tackles $900m shortfall … Lois Cairns & Rachel Young … The Press

    http://www.stuff.co.nz/the-press/news/10347442/Council-tackles-900m-shortfall

    The Ngai Tahu investment article noted on this Kiwiblog post is nothing much more than flying a kite. The comments on the article thread speak for themselves.

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  10. PaulL (5,971 comments) says:

    I don’t see why Ngai Tahu would be interested in investing in something that the council appears to use as a plaything rather than trying to achieve commercial returns. They tend to be reasonably astute, I’d imagine that they’d require an arms-length relationship from any council influence over the investments before they’d put money into it.

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  11. Gulag1917 (878 comments) says:

    Ngai Tahu should decide whether it is a charity or business they cannot have it both ways.

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  12. MT_Tinman (3,136 comments) says:

    I’m surprised Dalzeil is capable of doing anything of the sort.

    Reports from people dealing with the CCC suggest otherwise.

    Are you sure it wasn’t a “spokesperson” doing the commenting?

    Anyhow, good on Ngai Tahu for supporting the region.

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  13. publicwatchdog (2,516 comments) says:

    Are the Christchurch City Council ‘books’ open?

    How much is being spent on private sector consultants and contractors?

    How much could be saved by cutting out the consultants and contractors and keeping core Council services ‘in-house’?

    Penny Bright

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  14. graham (2,333 comments) says:

    Penny asks, “Are the Christchurch City Council ‘books’ open? How much is being spent on private sector consultants and contractors?”

    Good questions. And as Penny is asking these questions, I’m sure she won’t object to being open and transparent herself. Penny, I realise you’re busy so I guess you missed the questions that Nostradamus posed to you. The link, and the questions, are listed below. As you’re so keen on ‘transparency’, I look forward to your replies shortly. :)

    http://www.kiwiblog.co.nz/2014/08/general_debate_5_august_2014.html#comment-1373380

    —————————————————————————————————–

    I noted the following statement on your blog:

    I believe that is high time that NZ got our ‘House’ in order, and established the legislative framework to prevent and fight corruption, and ensure genuine transparency and accountability in local and central government and within the judiciary.

    If you support the ‘self-funded’ work I am doing – your donations are welcome and appreciated.

    Kiwibank

    Account Name: P M Bright
    Account Number: [redacted]

    Thanks! :)

    So, Penny, let’s put your transparency claims to the test:

    1. How many people have made donations through your website since you posted your bank account details?

    2. In the last financial year:

    – What was the total amount donated?
    – Who made the smallest donation, and how much was their donation?
    – Who made the largest donation, and how much was their donation?

    3. Have you spent any of the total amount donated in the last financial year?

    4. If yes to 3, please specify: (i) each item purchased; (ii) when it was purchased; (iii) the purpose for which it was purchased; and (iv) the relevant amount.

    5. In your Return of Electoral Donations and Expenses form, you declared an amount of $42.78 spent on “4 cans spray ink”? Given the unusual nature of that purchase in the context of a mayoral campaign, did the amount of $42.78 come from donations? Were the “4 cans spray ink” used to deface other candidates’ signs?

    6. Have you retained any of the total amount donated in the last financial year as remuneration (however characterised) for your “self-funded work”?

    7. If yes to 6, how much have you retained, and for what purpose?

    8. If yes to 6, have you, or do you intend to, declare the retained amount in your tax return?

    Your answers – all in the name of transparency – will be of considerable interest to Kiwiblog readers and the IRD!

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  15. Hugh Pavletich (192 comments) says:

    As the comments on the articles threads make clear (including the one I posted above), the days of Crony Capitalism in Christchurch must come to a close.

    There is a massive job ahead for Mayor Lianne Dalziel with Chief Executive Dr Karleen Edwards, in cleaning up and restructuring that Council, so that it can function to an acceptable standard.

    I suggest Kiwiblog readers closely read the comments on the articles threads.

    The sort out of the Christchurch Council is going to have enormous ramifications for Local Government throughout the country. Ms Dalziel made a very good start by putting in place the new Chief Executive for $390,000 a year … in contrast to the predecessors $540,000 … roughly a 30% reduction.

    There are massive changes ahead.

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  16. Gulag1917 (878 comments) says:

    The Christchurch City Council have contempt for the public and democracy e.g. the overwhelming public antagonism to the design for the new bus exchange.

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  17. cricko (303 comments) says:

    Thing is Hugh
    Lianne Dalziel now has her snout in the trough again (your trough, if your from ChCh)

    Her first call will be, Is it good for me ? Second call, Will it keep Karleen on my side.
    (If she needs to lie to you to benefit herself she will, she’s already proved that.)
    If both answers are yes then she will consider the likes of you.

    You elected her, you deserve her.

    Still even that must be better than Bob Parkers cook running everything.

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  18. lolitasbrother (669 comments) says:

    Yes, Christchurch is hard and getting harder.
    I think Ngai Tahu already suck the Christchurch Council for the lease of the Council building. Lease rates around 15% some people say, but, Transparency not, no one can get the figures, well I couldn’t anyway.

    It would have been fair for our Government to have Nationalised the earthquake losses, on the ground that it was truly a National disaster .
    Well its only about a billion dollars they Christchurch Council are looking for just now, , 150,000 ratepayers about $7000 each, yes thats this year. more later.

    My personal losses in the TC3 area about $100,000 on the property, and about a thousand hours back breaking work.

    Yes that right Prime Minister, you were going to stand shoulder to shoulder with us, you did not, and and this is why the gay boy will take Christchurch Central from us.

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  19. cricko (303 comments) says:

    lolitasbro
    They love shirtlifters in ChCh. Timmy Barnett etc. Love em even more than they love socialists.
    And if you are a communist and a poofter, nuf said.
    Get out while you can.

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  20. lolitasbrother (669 comments) says:

    Cricko, about Dalzeil and the elections. Christchurch was still in shock, at the election time.
    Bob Parker actually read the writing on the wall, and did not contest.
    Strong centre right people saw the disaster that Council is, and what we were in for and declined to stand.
    People like Hugh know needs to be done, Antony Gough is over here Thailand on a well deserved holiday.
    My feeling is that we are in for a very rough time. Many of those that could get out did.

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  21. gump (1,634 comments) says:

    There’s some confusion about Ngai Tahu’s tax status.

    They have to pay a discounted tax rate of 19.5% on the trading profits that are generated from their assets. Only the income that’s paid out to approved charitable organisations is tax exempt.

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  22. Jack5 (5,053 comments) says:

    Gump (4.34)

    Have a look at Ngai Tahu’s business reports as posted at the Charities Commission. No tax is paid.

    Where do you get the 19.5 per cent? Can you point us to where we can see the accounts online.

    The Inland Revenue site says this:

    Registering with the Charities Commission

    The Commission maintains a register of charitable entities. Registration is voluntary, but since 1 July 2008 a charity needs to be registered by the Charities Commission to qualify for the following tax benefits:

    exemption from income tax
    gifts to the charity exempt from gift duty (for gifts made before 1 October 2011)

    Gump, please elaborate on your statement on Ngai Tahu (and Sanitarium) tax status.

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  23. burt (8,238 comments) says:

    gump

    How do I in “One rule for all” NZ get a flat rate of 19.5% tax on my earnings ?

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  24. Jack5 (5,053 comments) says:

    Further for Gump (4.34):

    I’ve found Ngai Tahu’s accounts. These show the tribe had $147 million of tax free income in 2013 and $95 million in 2012.

    Show me one of their competitors who can match this benefit.

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  25. Adolf Fiinkensein (2,888 comments) says:

    Jack5
    Does it occur to you that perhaps only the charitable distributions were reported to the Charities Commission?

    Ask for a copy of the annual consolidated accounts if you want the complete picture.

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  26. Jack5 (5,053 comments) says:

    Fiinkensein (5.18):

    Competitors will be turned green by this:

    Ngai Tahu’s accounts for 2013 show (to just one decimal place):

    Pre-tax profit from operations $121.9m
    Less non-taxable income $147.4m
    Tax losses brought forward $0.09m
    Non-deductible expenses $27.8m

    This leaves eligible for tax $2.2m

    Tax on this at 17.5 per cent $389,000 !!!!!!!

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  27. metcalph (1,428 comments) says:

    Why was the city so under insured. Who was responsible for that? It smells of that bastard Marriott to me.

    The City was underinsured because nobody knew there was a fucking faultline running through the city. This assessment of risk was made by Marryatt but the collective wisdom of his predecessors.

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  28. soundhill1 (190 comments) says:

    “The City was underinsured because nobody knew there was a fucking faultline running through the city. This assessment of risk was made by Marryatt but the collective wisdom of his predecessors.” Funny. Christchurch Cathedral has lost its spire twice before. Risk well-know and lots of strengthening work going on around the city and suburbs. But they reduced the cover. Now they may get rid of profit-producing assets, which are currently keeping rates down. So the rates will have to increase or service level drop. Maybe we should sell our rubbish bins and, like Wanganui, have no mention of waste management on the rating budget. We could drop our rates straight away by 10% and avoid low waste people paying hugely for a service they do not use. Or keep the rates the same and we immediately have $35,000,000 or such per annum in perpetuity, not the one off $400,000,000 talked of sell off. And we get something back on the trucks and plant, or don’t have to pay the loan on that.

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