Eugenie Sage

Christchurch City Council needs to keep our assets

by Eugenie Sage

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.

Published in Economy, Work, & Welfare by Eugenie Sage on Fri, February 21st, 2014   

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