<strong>The</strong> <strong>Star</strong> Thursday <strong>December</strong> <strong>21</strong> <strong>2023</strong> 16 OPINION Latest Canterbury news at starnews.co.nz City’s assets: How can we decide if we don’t hear from the public? <strong>The</strong> debate over the future of Christchurch’s public assets continues. Today city councillor and a director of city council owned Christchurch City Holdings Ltd Sam MacDonald says the people of Christchurch have been denied the chance to have their say on how to maximise the value of the city’s assets How did the discussion around maximising the longterm value from Christchurch’s assets become about ‘asset sales’? Yes, asset sales make for emotive headlines and slogans. But selling assets had little to do with what was, in fact, a proposal to grow the city’s assets, secure investment to enable our companies to grow, start to pay down debt and minimise rates demands. Where did all the confusion come from and what actually happened here? In early 2022, council decided that, for the first time in its history, Christchurch City Holdings Ltd (CCHL), the ratepayerowned investment company, should be reviewed. This review was long overdue. This is in stark contrast to previous adhoc council decisions regarding CCHL, for example you may recall in the early 2000’s when Garry Moore was the mayor, they attempted to sell off 49 per cent of the Lyttleton Port to Hong Kong-based Hutchison Port Holdings. CCHL owns Lyttelton Port, Enable, EcoCentral, CityCare and majority shares in Orion and Christchurch Airport. <strong>The</strong> combined value of these assets is close to $6 billion and CCHL as the parent company holds $2.3 billion of debt. Council gets an annual dividend from these companies’ profits which is reused to offset rates. Christchurch is fortunate to have these companies as to meet steadily rising cost we can either cut costs, reduce services, increase rates, borrow money or maximise the financial contribution from CCHL. For context, council is working through its 10 year Long Term Plan, and the draft rates increase is hovering around 13 per cent for next year. This year, CCHL anticipates to pay around $50 million in dividends to council but, with volatility and borrowing costs, this is expected to drop to $33 million in 2024. Some people have been quick to point to the new stadium as the primary driver, but this is incorrect. We have separated out the cost of the stadium for transparency – of the 13 per cent draft rates increase, the stadium is around 3 per cent. As part of the council’s review, it was found CCHL could be generating significantly more through higher, more stable dividend flows. Maximising contributions from the city’s assets was the basis of the recommendation last week. <strong>The</strong>re are three questions people have asked me this week which I think are useful to consider: “What has CCHL done and identified?” At council’s instruction, CCHL reviewed each of the city’s six subsidiaries and considered their performance and contribution to the city. CCHL, including through an independent and comprehensive report, identified the returns back to council were much lower than they should be. “What was proposed and what did council decide?” <strong>The</strong>re’s been general acceptance that council’s assets are not delivering enough value to the city. CCHL presented two draft options to council and discarded another two. <strong>The</strong> two discarded options were the status quo and the two options presented to council were called the Enhanced Status Quo and the Active Portfolio Manager. Briefly, the Enhanced Status Quo option would see a reduction in investment in the city’s companies, a push for improvement and a more commercial approach from under performing businesses, like Lyttelton Port. This option would see a projected $220 million uplift in dividends over the next decade – that averages about 4 per cent off our rates each year. <strong>The</strong> Active Portfolio Manager option – the option recommended by CCHL – would ensure the level of ratepayer investment in city assets would not drop below what it is now. <strong>The</strong> ability to attract growth capital from other investors would enable the companies to grow, for debt to start to be paid down and for CCHL to invest in new assets that might better serve the city’s changing needs. An endowment fund would be set up allowing CCHL to invest in new opportunities. This scenario would have enabled dividends to the city to increase by up to $450 million over the 10 year plan. This scenario would have allowed a stable dividend to council each year and potentially reduce rates by 7.5 per cent. A proposal to invest more in our companies, invest in new assets, protect the level of current public investment, pay down debt and start reducing rates demands got oversimplified down to an ‘asset sales’ slogan. This is misinformation. “So, what happened and what does it mean for Christchurch?” Last week, these proposals came to council with a request to go to public consultation and ask ratepayers for their views. Given the significance of this decision – including ratepayers’ interests – this should have been put to the public. Sadly, discussing these options with the public was voted down by 8 votes to 7. You will not have a say. As Mayor Mauger said: “<strong>The</strong>se are companies owned by everyone. How can we make an informed decision if we don’t hear from the Phil Mauger public? Nothing may have changed but while we are working to rebuild trust and confidence in council, it seems silly not to hear from the people of Christchurch.” • McDonald and fellow city councillor Sara Templeton were not able to take part in last week’s vote on assets because they are directors of CCHL. Restoring your confidence through your smile Full service Denture Clinic and Laboratory Caldent Denture Cleaner Free Consultation No Obligation Ph: 385 5517 + 396 Innes Road, St Albans admin@denturesplus.co.nz + denturesplus.co.nz On time, friendly, professional We get the job done. Plumbing Electrical Gasfitting Drainlaying Book your job or free quote today 24/7 Ph 0800 30 35 30 foleys.co.nz SERVICE
Thursday <strong>December</strong> <strong>21</strong> <strong>2023</strong> <strong>The</strong> <strong>Star</strong> 17 DON’T MISS THE EVENT OF THE SUMMER. NEW LOCATION. NEW FORMAT. 1 WEEKEND, 3 EVENTS. CRANKWORX SUMMER SERIES IS BACK, MARCH 1 ST - 3 RD 2024 CRANKWORX.COM
Change language