Wellington Airport extension increasingly coming undone: Fool’s Gold

With the long term plan submission underway this week, the oral ones, we start to see the airport extension starting to increasingly come undone. The consultation to date has been, in my opinion, a sham, typical of the arrogance of the uninformed and money men (and women) who try to sell us this snake oil.

First up, best dressed, before we get to the submissions including today’s, someone who has made contact with me on their theory as to why the airport is so hell-bent on getting this extension and getting everyone else to pay for it.

The real reason for the airport expansion is this: Given that WIAL is a natural monopoly, it is regulated by the commerce commission, and is generally limited to a profit of 8.4% on it’s assets.

Increase the asset base, in the form of a lengthened runway (and not incidentally, a new terminal) and magically, WIAL can charge more for the exact same services it already provides, even if no additional airlines arrive, or routes open up.

Source

It’s that simple. Follow the dollars. Unfortunately for the taxpayer, one suspects that most of those increased profit dollars will end up in the hands of Infratil, and not back with the ratepayer who is funding the expansion.

In plain English, the more land and assets that the Airport has, the more they can charge, regardless of whether more airlines come, or not. So from Infratil and the Wellington City Council, then investing results in increased dividends. Never mind the health, economy, or otherwise of the region.

The Council has been effusive in it’s self-praise of the consultation for the long-term plan over the last week, high-lighting the volume and spinning the positive side of things, such as the airport extension.

Which is interesting, because the Council did not put out enough information about what the Airport extension will cost us. There is no business case. None. Therefore, this can be seen as no more than the usual propaganda and bullshit that we have come to expect around a pet project.

But that’s normal.

There is also a floating question around the legality of the way that the Council has been operating in regards to this extension. That will come out in the next few months.

So far Councillors and Mayor refuse to be drawn on where they sit. Typical political machinations.

Helene Ritchie is definitely opposed and Simon Woolf is wavering, as a Facebook post suggests:

A solid business case ( including a CBA), Resource Consent approval, and a Long Haul Airline, to carry passengers and freight,( in a manner which is cost effective, and incentive based), is a bottom line for me. – Source

As it should be for all Councillors and Mayor.

But so far, none of the others have had the courage to take the same stand.

It really is simple. A business case will drive out the answers to these questions at which point, along with the other reports including probity, environment, and the impact on rates, allow an actual consultation to take place, rather than this faux, shiny, media-managed circus we have seen to date.

BARNZ presented to the Council today and my sources have reported back that they were under some attack by Councillors, led by Justin Lester, who appears to have committed the city to $90 million of potential costs and damn the consultation.

Justin Lester took a political line with his question, rather than engaging on any of the important economic/demand/viability issues.  He asked “Why did you go to the media before you provided council with your submission” – obviously wanting to try and discredit them.  Their Chair, John Becket, who was excellent, replied by saying that they submitted and spoke to the media at the same time, to which Justin said he thought that might be inaccurate.  Whatever affect Justin was after, it really just made him look petty.

They (BARNZ) had their economist with them, who was able to shoot down all the economic questions he was asked.  Swampy tried to suggest that the work BARNZ had done was not as comprehensive as EY and PWC, and asked could their work be relied on, in comparison to EY and PWC’s positive reports.  But the economist replied very clearly that he disagreed that EY’s report was positive, that in fact it wasn’t and was heavily caveated, and PWC merely reinforced the caveats and EY’s high level findings.  Later he found a number of references in the EY and PWC reports that confirmed this, and urged Councillors to “read the report thoroughly”.

The main area of argument was how much the airlines would charge for landing fees.  BARNZ noted that based on how WIAl has charged in the past, their expectation was that they would charge the maximum they were entitled to, which came to $50 million, of which all the other airlines would have to pay $47m.  Jo said BARNZ has said that the existing airlines wouldn’t pay for it if they didn’t use it to which John replied “words are fine, but we’d like to see an ironclad guarantee that this position would hold”.

But they added that it would need to be paid for by someone, so would in effect fall back on the existing airlines, and that the only way for airlines to recoup this is though higher fares.  They also noted that putting up fees would discourage other airlines flying into Wgtn (because they have to ensure their routes stay profitable), which would negatively impact on the Wgtn and NZ economy.

All very good points, however, knowing the Council, unlikely to have any affect at all given their idea of “consultation”, proven by Lester and others speaking out about committing to the money.

Of course, it’s not just all about money. We know that should an extension go ahead then the marine environment will be utterly destroyed in that area (after only getting it back), a heritage area will be wiped, noise will increase, pollution will increase, costs will increase, and we’ll be left holding the bad end of a third-investment in a traditional oil company.

It’s clear that we have a number of politicians who suffer from a severe lack of intelligence, have made their mind up, and have forgotten the face of their fathers.

It’s a damn shame it isn’t election year.

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