Auckland Mayor Phil Goff is believed to be contemplating selling one of the Super City’s crown jewels, the Ports of Auckland company.
The asset sale, possibly of the operating company rather than the 77 hectares of valuable waterfront land downtown, could raise hundreds of millions of dollars for a mayor struggling for new funding to pay for infrastructure.
A CBRE property report for the company in 2013 valued the land between $300m and $600m. The whole company was valued in an Auckland Council Investments Ltd document at $1,079 million as at 2014, up from $623m in 2010.
One source this week suggested either a sale of the operating company, or a part sale of the entire entity could be aimed to raise $500m for the Council to use on other projects.
Goff was elected in October pledging to keep permanently in ratepayers’ ownership the “port’s land – its most valuable asset” and saying “the port’s operation should continue within Council ownership pending long-term decisions on the future of the Port”.
But it is known the mayor’s office has now raised the prospect of a part sale of the asset in closed door sessions and conversations within the business community – and is in the early stages of testing the political and public opinion waters on the plan.
Goff’s careful campaign commitment to retaining the land could assuage high public feeling over prime downtown land falling – again – into private ownership. The Ports of Auckland Ltd company was listed on the stock exchange when the Waikato Regional Council sold its 20 percent holding in 1993 but was returned to full public ownership under the former Auckland Regional Council in 2005.
Port company plans to seek permisson for reclamations further towards Devonport to cope with future growth and mega container vessels have proven controversial.
The mayor is needing new sources of finance for transport infrastructure as he tries to keep rates to his campaign promise of no more than 2.5 percent increases, averaged over the first term. Central government rejections of other transport funding options including a regional fuel tax and congestion pricing have limited Goff’s options for raising the money the city needs.
His campaign policies flatly ruled out selling the council’s remaining 22 percent shareholding in Auckland International Airport Ltd, an asset he regards as critical for the city which provides a “significant income stream for Auckland ratepayers”. This financial year it is expected to be about $51m.
The Waitemata ward councillor Mike Lee, a former regional council chairman, had heard whispers of the “theoretical” sale of the port company.
“This is no surprise. I fear the worst. This is essentially a privatisation of a strategic asset. I hope it is not true.”
He said the land beneath the port – which is largely reclaimed – was just rubble. The operating company is where the money is.”
Lee said: “The lurk is ‘It’s okay, we are keeping the land but just selling the operating company.”
Today Goff issued a broad statement which left all options open. The response read:
“I’ve had wide ranging discussions about Auckland’s port, but no specific proposal on the Port’s ownership has been presented to me.
“I’ve made no decisions about the port’s long term future as yet, but intend to make progress on this matter over the course of this term.”
It was interesting in its terminology. No specific proposal “has been presented to me” did not suggest a specific proposal had not been discussed by him or his people.
Ports of Auckland made a 2015/2016 profit of $83 million and paid $54m in dividends to its shareholder, Auckland Council Investments Ltd, owned by the ratepayer. The company said this represented $103 per Auckland household, or 4.4 percent of the average residential rates bill of $2320.
The Port of Tauranga is a listed company 54.4 percent owned by the Bay of Plenty Regional Council, makes up to $83m a year and its market capitalisation is about $2.8 billion, or 35 times’ earnings.
In Melbourne, a port with a bigger land area than Auckland, the Victorian government has raised more $9 billion dollars by leasing the right to operate the port to a private company for 50 years. It is using the money to build transport infrastructure.
Goff’s campaign policy reference to the future of the port relates to continued debate about whether it ought to move to Whangarei or even be rebuilt in the Firth of Thames.