Opinion Stan Andis: The Funding Circus

The year was 2013, a few days after written submissions followed by oral submissions had closed against the 2013/2014 Draft Annual Plan. The ink on the pages of the Draft Plan had not had time to dry while awaiting approval by the Council. The opening agenda item of the 29th May 2013 Wellington City Council meeting was laid down to approve the sum of $1 million toward the resource consent application by Wellington International Airport Ltd. It came from a late bid by WIAL dated 20th May 2013 which sought funding to extend the existing runway at Wellington Airport.

Now, wait a minute, the Draft Plan had already progressed through all stages yet new rules had been laid down to accept this late request. The question remains as to why WIAL was provided with a special privilege for this application? I wonder what the Local Government Act states? It doesn’t end there, as supporting Council documentation to Councillors stated that the $1 million could be “funded from identified savings in the 2012/2013 financial year.” What is more the document stated that “no consultation” had eventuated.

At a time of staff restructuring, proposed cuts to library hours, millions of dollars which were required for earthquake strengthening and the storm water and sewage infrastructure being in disrepair, “identified savings” had been found and devoted to the airport, a largely private company with significant annual turnover. Clearly, a blind eye was directed toward an application that was completely devoid of a formal, public and transparent process and procedure. The Funding Agreement of that arrangement also clearly stipulated that the maximum amount would not exceed $1 million.

Alas, it wasn’t long before WIAL went back on the begging trail, and regardless of the 2013 Funding Agreement, backstage antics once again took over, and the Council agreed to a further $1.95 million in December 2014. Not from “excess funds” this time, but from WIAL shareholding returns to the Wellington City Council. Remarkably, the “return” from WIAL almost exactly matched the amount of the required additional funding.

The ratepayer has now contributed $2.95 million to this process without the cost of Officers’ time being included or made public.

In the meantime, the Mayor in her conflicting role as a Director of WIAL, together with Kevin Lavery attended a meeting of the Mayoral Forum held on Friday 27th March 2015. The Forum comprised of Mayors from Wellington City Council; Kapiti District Council; Hutt City Council; Upper Hutt City Council; South Wairarapa District Council; Carterton District Council; Porirua City Council; Greater Wellington Regional Council; and Masterton District Council. Mayor Wade-Brown participated in the discussion but left the room when it came to the vote.

The Forum resolved in principle that Wellington City Council would contribute $90 million and regional councils would contribute another $60 million toward a proposed 350 metre runway extension of Wellington Airport provided that:

  1. That there is a robust business case
  2. A named airline has committed to flying here long-haul
  3. A performance-based funding formula (eg a loan to be written off against delivery of agreed criteria
  4. The availability of central government funding
  5. An appropriate funding level from WIAL – the owner (which is currently committing only $50 million, 3 times less than the Council’s agreement).

My arithmetic tells me that after WIAL’s contribution there is a shortfall of at least $100-150 million. When several Ministers have already put the damper on any funding it begs the question as to who will stump up with the balance?

I wonder how many ratepayers in regional areas are aware that their respective council have made such an undertaking? Not many I suggest, as to date, apart from a dubious LTP process by the Wellington City Council, there has not been any public consultation on this. In the press release of the Mayoral Forum Mayor Guppy of Upper Hutt said that there was “a compelling business case with over 700 people per day each way flying long-haul from Wellington’s market catchment.”

That’s very interesting, as to date no business case has been produced.

How then can all these commitments be bandied around without any knowledge of how much the all-important runway will cost or what is actually proposed? In fact no one has addressed the question of increased costs, let alone the publication of any clear plans to date. It’s all about estimated assumptions from a discredited economic impact statement.

It seems WIAL has been trying to “sell” the proposal as a ruse and our Councillors are falling for it.

While attending a recent City Council meeting I learned that a High Court hearing is to be heard in November between Civil Aviation Authority and the NZ Pilots Association that will address the length of the Runway End Safety Areas (RESAs) at Wellington Airport. One party states that 90 metres at each end is satisfactory for long-haul flights while the other claims 240 metres is needed. Imagine the additional cost (both economic and environmental) this would amount to if the court’s decision requires an additional 240 metres!

The Mayor of Wellington made approaches to Chinese financiers on her recent journey to China where no actual reported deal was signed. It’s difficult to imagine how any Chinese financier would fund any project, let alone the proposed Wellington Airport runway extension, with a pay-back of >40 years and no proper business case. Furthermore, no discussion has eventuated to date talking about what would happen if Infratil decides to sell to the best bidder once and if the extended runway is completed and paid for by the hapless public.

What a circus!

WCC China delegation (Photo: Stuff)

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