New Brooms, Same Old Bullshit

Here we go again. Suddenly the tired old asset sales rabbit is once again pulled out of the increasingly battered hat, in an attempt to bedazzle and bamboozle us. Following the October 2022 local body elections, both Auckland and Christchurch got new Mayors - Wayne Brown and Phil Mauger respectively. Christchurch also got more Rightwing City Councillors.

In Brown's case he seems to confuse the reality of being a Mayor in New Zealand (albeit of our largest city) with his fantasy of being an executive President. So, he came into his new job all guns blazing with big ideas, including asset sales (the excuse always used is to reduce debt). He proposed selling Auckland City Council's 18% shareholding in Auckland Airport (at the time of writing, this has not advanced any further, not publicly anyway).

"The logical conclusion is that Brown's arguments obscure an ideological view: that the public shouldn't own shares in publicly listed companies or commercial operations and should wherever possible reduce public debt. The plan to sell shares and cut debt is also part of an ideology that the role of Government in providing services and investing in infrastructure should be limited, and progressively reduced over time to allow more tax cuts and to increase the privately-owned share of activity and resources in the economy" (Spinoff, 5/12/22, Bernard Hickey).

Brown soon found himself with other fish to fry. His performance as the man "in charge" during Auckland's January 2023 catastrophic flood was as much of a disaster as the natural one. In the course of that, Brown committed the politician's cardinal sin of pissing off the media - he was caught out complaining that he wouldn't be able to play his regular game of tennis with his mates because he had to deal with "media drongos about the flooding".

He then compounded his foot in mouth syndrome by ringing the New Zealand Herald and saying to them: "Don't fuck me over". That guaranteed him a nice big target on his back for journalists, columnists and cartoonists. In a remarkably short period of time in office, he had become a national joke, Brown the clown.

Christchurch also has a new Mayor who, initially at least, saw himself as some sort of executive President. In Phil Mauger's case, however, that delusion didn't last long. Which is not to say that he isn't a buffoon. He's a big kid with a penchant for all sorts of boys' toys. He owns an old fire engine tanker, so in 2022 he suggested using it to spray water and bleach into the city's fire damaged and putrescent sewerage treatment plant. His personal contribution to the fight against climate change has been to spend a fortune buying a hydrogen car (despite the minor inconvenience of no readily available source of fuel).

Subject Never Mentioned In Election Campaign

Asset sales suddenly appearing back on the agenda in Christchurch was not the result of Mayoral whimsy, but a covert campaign dating back to the previous City Council headed by former Mayor, Lianne Dalziel. Asset sales had not been mentioned by the Christchurch City Council since it tried and failed to sell Citycare nearly a decade ago - which was a major and successful campaign by Keep Our Assets Canterbury (KOA, a group with which CAFCA is heavily involved. I'm its Convenor).

But, lo and behold - just weeks after the October 2022 local body elections, the City Council announced that a confidential report on its publicly-owned assets by investment bankers Northington Partners had been commissioned earlier in 2022 (at a cost to ratepayers of $275,000). And, guess what - the report recommended selling them. It never used the word sell - it talks about "recycling" assets, of turning "the family silver" into gold. And it tries to soften the blow by recommending only partial sales.

The Council voted to investigate this further. The rationale is the same as when the Christchurch City Council first tried to flog off assets last decade - it is short of money (that time, the excuse was the post-quakes rebuild cost). This time around, the Council that says it is short of money is the same one that, in 2022, blithely voted an extra $150 million towards the ballooning costs of the white elephant stadium it is building.

KOA immediately pointed out the obvious - not one Councillor nor the new Mayor had ever mentioned the subject of asset sales during the 2022 campaign. So, not one of them has a mandate to sell them. KOA told the Council it is buying a fight - KOA representatives John Minto and Steve Howard told Councillors that to their faces at a February 2023 full Council meeting, while other KOA members displayed a "Keep Our Assets" banner in the public gallery.

We've been here before, a decade ago, with a report by "experts" saying that asset sales were the only solution to the cost of Christchurch's earthquake rebuild. That City Council tested the waters with the proposed sale of Citycare, and the people of Christchurch said "no way". Money was found and the rebuild was completed without the need to sell any of our assets. Citycare wasn't sold and asset sales dropped off the agenda.

And who would buy these assets if they are sold? The previous City Council had always refused to name the one prospective buyer of Citycare, because of "commercial sensitivity". Well, in 2022, I found out - literally in the course of a casual conversation with an anonymous stranger on a suburban street. It was Veolia, the huge French water services transnational corporation that already has its talons sunk deep into NZ. It would be the likes of them who would snap up Christchurch's publicly-owned assets. KOA is gearing up for another fight to Keep Our Assets.

The arguments against asset sales are the same now as a decade ago - once they're gone, they're gone. Talk of turning the "family silver" into "gold" is true, insofar as someone else will own our assets and be reaping the gold. They're valuable and profitable - why would the City Council sell them, for short term, one-off gain?

One reason might be to raise the extra $150 million it blithely voted to pour into the white elephant stadium. There's item number one for a "line by line" cost-cutting examination. Talk of recycling is apt - this proposal needs to be put into the recycling bin and be taken away by the recycling truck. The people of Christchurch successfully fought the City Council the last time it tried to sell our assets. We will do so again.

Advantages Of 100% Ownership

The most interesting mainstream media coverage appeared in Newsroom (6/3/23, David Williams). The investigative journalist spoke to Barry Corbett, who served 15 years as a Christchurch City Councillor, including as Deputy Chair of Christchurch City Holdings Ltd (CCHL), the Council's investment arm. "It owns, on behalf of the city, Christchurch International Airport (75 Council-owned, with the Government), Lyttelton Port Company (100% owned), lines company Orion (89%, with Selwyn's Council) and fibre broadband company Enable (100%)".

Corbett highlighted the five week-long blackout endured by Auckland's central business district in 1998 and a much shorter Auckland blackout in 2006. "'As a Board we called in Orion and said, 'Can you guarantee that this won't happen here'? And they came back and they said: 'No, we can't guarantee that unless we have quite an extension of infrastructure'. Orion said that would require smaller dividends - millions of dollars less - to the Council for five or six years so money could be spent on infrastructure.

Corbett: 'We debated that and decided, yeah, OK, we'll go without the dividends; make sure you get that done'".

"That work was 90% finished, Corbett said, when the 2011 earthquake struck. The unfinished section was in the city's east. 'You might remember, within a week we had a 66-kilovolt cable looped over the Avon River to provide the east with power. The rest of the city was good after the earthquake - the power was up within a matter of days'. Therein lies the lesson. The sequence of events was possible because it was publicly owned, Corbett says. 'That's why I've always believed that something like that, the power, should be in public hands - the airport, the port, all those big infrastructure ones - instead of making dividends that go into private hands'".

"The classic case, though, according to Corbett, is Lyttelton Port. Like many regional ports, it used to be listed on the stock exchange. Until 2014, that is, when CCHL acquired all the shares and the company de-listed. Even as the majority shareholder, before CCHL took total control, the Council couldn't do certain things, such as build a cruise ship terminal, Corbett says".

"'The returns aren't as good (for the port) as allowing container ships there all the time. But the return is brilliant for Canterbury'. Canterbury as a whole was better off with a cruise ship terminal, Corbett says, so the Board decided to push ahead. Construction of the port's new cruise ship berth was announced in 2017.' That's what you can do when you've got 100% ownership'".

Supporters of partial privatisation point to the mixed ownership model of electricity generators and retailers, a policy pushed through by the 2008-17 National government. "But research released last year (2022) by FIRST Union, the Council of Trade Unions, and climate group 350, found those companies have been paying out billions more in dividends than they've been making in profits, which has driven up electricity prices".

A City Of Citizens, Not Consumers

"Veteran activist and two-time Christchurch mayoral candidate John Minto, who ran on a (KOA) ticket to keep the city's assets, is angry about the partial privatisation plan and fears the city is sleep-walking towards it. To Minto's annoyance, asset sales didn't feature in the election campaign. 'This was the most important issue that should have been before the people of Christchurch and it wasn't', he says. 'The citizens have to get mobilised to stop our elected representatives undermining the future of the city - it's a travesty of democracy'. In particular, he accuses Mauger of breaking an election promise".

"Minto says appointing Northington to conduct the review is, he says, like asking a fox how the chicken coop should be guarded. And he accuses supporters of partial privatisation of making arguments of convenience - of scaremongering about rates rises - when what's behind it is ideology. In the 1980s and 90s, neoliberalism pinched State assets, he says, and now they're coming for Council companies".

"In a financial sense, having big companies on the books means the Council can borrow money more cheaply. Owning large assets gives the city economic standing, he says, ensuring it's not a hollow shell to simply provide services in return for rates. But, there's more to it than that, Minto says, something less tangible. It's about Christchurch being a city of citizens, rather than a city of consumers".

"'And that means that we - we as a community - own these really, really important, valuable things that are valuable for us and will be valuable for our children and grandchildren'. There'll be a big campaign against it, Minto says - 'you'll hear a hell of a lot from us'. He makes one last promise: 'It will be a successful campaign'".