Christchurch City Council needs to keep our assets

Christchurch Mayor, Lianne Dalziel’s State of the City speech this week was a welcome signal that under Dalziel, the Council is determined to assert its right to represent Christchurch citizens and shape the city’s future. The Council appears to be engaging with CERA in a more muscular and confident way, rather than being cowed and dominated by Minister Brownlee and CERA.

The City Council’s forthcoming decisions on its draft annual plan and budget are of particular interest. The Council’s under-insurance means there is a big gap between the costs of the rebuild and the insurance pay-outs. How to close that gap is a challenge. Further increases in the Council (and our) debt are unwise and unsustainable. Selling council assets and using the proceeds to meet the shortfall would be the worst form of expedient, short term thinking.  Renegotiating the $4.8 billion earthquake cost-sharing deal between the Council and the Crown which the Mayor is flagging is a much sounder option.

New councillor and chair of the powerful Finance Committee Raf Manji has repeatedly raised the troubling prospect of selling Council owned assets.  Cr Manji should be the minority, as several current councillors (Yani Johanson, Jimmy Chen, Glen Livingstone, Phil Clearwater, Andrew Turner) have signed pledges to keep all significant assets owned by the Christchurch City Council.

Nevertheless, Council this week appointed Wellington investment firm Cameron Partners to review the commercial assets of Christchurch City Holdings Ltd (CCHL). Those assets include the Lyttelton Port Company, Christchurch International Airport and Orion. The $40 million dividend income annually which CCHL companies provided to the City Council pre ‘quakes helped to keep Christchurch’s rates lower than other metropolitan centres.

It makes no sense to sell money making assets like these to invest in ones (such as a new stadium) which given Dunedin’s example are likely to be a drag on ratepayers and lose money rather than make it.

What those promoting asset sales such as Cr Manji overlook is that assets are about providing a public service as well as making money. This public service ethic served us well through the earthquakes. Post ‘quakes, Orion got the power back relatively quickly (particularly when compared to the lengthy power outages in Wellington following the recent high winds). This was possible because in the 1990s Orion invested heavily in disaster proofing, strengthening their sub stations and even paying for a City Council road bridge to be strengthened because it was vital to Orion’s infrastructure.  How many private companies would stump up for such costs because it’s the right thing to do?

Cr Manji seems unaware of the Christchurch citizens’ history of strong support for Council ownership of local assets. Opposition to the Fourth Labour Government’s privatisation crusade in the late 1980s earned the city the moniker of People’s Republic of Christchurch. Christchurch maintained its social housing stock, and remains the second largest landlord in the country. This housing is a valuable asset in helping create a fairer city, especially in the current housing crisis.

In any renegotiation of the cost sharing agreement between Council and the Crown, the City Council must push back on the big ticket items, such as the $243 million covered stadium. Under the agreement, Council is responsible for funding the stadium even though it was imposed on the city by the National Government’s anchor project plan. Postponing its construction long, long into the future would be a major saving and help balance the budget without needing to sell assets. A smaller scale convention centre may also be more affordable.

1 Comment Posted

  1. Statistics NZ reveals that the top 1% own more wealth than the botton 50% of Kiwis. Rather than look to liquidation of public assets, perhaps it is time for the most privileged Kiwis to admit that the system has been tilted over the last 30 years heavily in their favour and that it is not especially fair that the majority of Kiwis make sacrifices whose benefits will mostly favour the most privileged. Perhaps it is time for this tiny elite to admit it is time to pay back to society a small percentage of the disproportionate rewards they have received.

    It is a national priority to restore Christchurch or our national economy will suffer. National prefers to put all public business and assets in private hands, and the proposal to sell off Christchurch is yet another example of a radical privatization agenda.

    They complain that there is no other source of revenue, but this is not so. For example, the top decile households have a million or more in wealth. With 146K such households, a one time 10% wealth tax on the top 10% most wealthy would return $14.6 billion dollars.

    In her book “The Shock Doctrine”, Naomi Klein explained how a privileged elite uses disasters in countries from Africa to Europe to Latin America to North America to achieve radical conservative goals. For example, Hurricane Katrina was used by American conservatives to rapidly and fundamentally alter the social structure of New Orleans. Will the same happen here? The Kiwi privileged elite is at work attempting to do the same in Christchurch and sale of assets is just a start. But the tables can be turned, and the same Shock Doctrine can be used in favour of progressives. Some economists suggest it will be 50 to 100 years for the NZ economy to recover from the immense financial burden imposed by the quake.

    Who will benefit most from the rebuilding? The small minority of citizens who have managed to acquire more than half of NZ- that’s who. 50 out of one hundred Kiwis own in total less than half what the most wealthy person in that group owns. Yet each member of that group is being asked to sacrifice public wealth in equal measure to restore the value of assets that are grossly in the hands of a tiny minority of Kiwis. Is that fair? Of course not.

    If each citizen contributed a tiny percentage of their wealth every year to the rebuilding, then there would be more than sufficient money to eliminate the impact of the earthquake and simultaneously restore some of the corrosive imbalance caused by wealth inequality in NZ.

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