OPED DOM POST: Richard Randerson- The Runway Extension is pouring money into Cook Strait


See article here.


Wellington Airport: Is it fair for public money to fund corporate profit and assets?

 OPINION: Wellington Airport’s CEO, Steve Sanderson, wrote glowingly (Dominion Post, June 25) of the benefits from extending Wellington’s runway 355 metres into Cook Strait.

The homework has been done, the benefits are clear, the money will flow, the resource consent application has been lodged and all that remains is for Wellingtonians to make supportive submissions to the Environment Court, he writes.

Who could disagree that tourism, student numbers and business ventures would benefit from better connectivity? But would a runway extension achieve such benefits? And might there not be better ways to invest public money for that purpose?

The costings for the whole project are murky. For some years now the cost of the extension has been stated to be $300 million. It matters not whether the extension goes 300m into Evans Bay, as originally proposed, or 355m into Cook Strait, as now proposed.

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Inflationary adjustment is not considered, nor any allowance for cost over-runs inevitable in a project of this size. A cost that never changes whatever the plan has zero credibility. The true cost will almost certainly be much more, maybe as much as $500m.

And who will pay? Sanderson says the economic modelling has been “compelling from our perspective”, and that the airport will be “funding its fair share of the cost”. An earlier statement from the airport company said  it would stump up $50m, about 17 per cent of the $300m estimate.

Considering that the airport owns two-thirds of the asset, and that owner Infratil is a huge global company with no shortage of investment funds, few would regard 17 per cent as a fair contribution. A proportional figure would be 67 per cent, or $200m, but the airport does not regard the venture as sufficiently profitable to warrant investing more than $50m.

Instead, it seeks $250m from the public purse in what is a stunning example of corporate welfare. The benefit accrues to the largely privately-owned airport by significantly enhancing its value, thus allowing it to hike airline, parking and other charges and reap an increased annual profit – largely at the expense of Wellington’s travelling public and business interests.

Infratil also benefits from owning a more valuable sale proposition.

Is it fair for public money to fund corporate profit and assets?

The ‘build it and they will come’ argument lacks credibility. Air NZ and BARNZ (Board of Airline Representatives New Zealand) are notably opposed to the project as being completely unviable.

BARNZ has a membership of 26 airlines flying in and out of NZ, and the judgment of such a broad group of primary airport users is weighty. The Government has also indicated the project is not a priority in terms of strategic significance.

A proper business case is essential to establish the actual costs and test the claimed benefits based on inflated passenger and revenue projections. It has cost Wellington ratepayers $3m so far to get the project to the resource consent stage. This is potentially wasted money if a robust business case finds it unviable.

What homeowner would spend big money to get resource consent for a home extension without knowing if the money was there to build it? The airport has put the cart before the horse.

Environmental issues are also a key concern. Lyall Bay is one of the cleanest pieces of ocean in the region. It is the habitat of the little blue penguin, giant kelp forests and other important marine life. The South Coast is a special environment in Wellington and has a marine reserve and its own management plan.

Dumping several million tonnes of rubble into the ocean will cause major environmental issues and ruin many recreational uses, including surfing and fishing.

Climate change concerns are another reason for improving existing connectivity rather than maximising flights.

There are better ways for the council to spend our money. Wellington has many attractions: international student numbers are up, visitor numbers are increasing and creative business ventures abound. Spending $300m to enhance business infrastructure, on earthquake strengthening, student resources and visitor experience would be of great benefit.

We are also a city that cares for people at the margins, as the council’s commitment to a living wage demonstrates. Money is urgently needed for social housing and support so that the homeless and marginalised may play a full role as citizens.

Steve Sanderson has encouraged Wellingtonians to make submissions to the Environment Court. Guardians of the Bays makes the same plea: make sure you ask questions of this project. This is your money, your city and we deserve a progressive vision that is built on something more than subsidising private companies.

Economic, environmental and social factors do not support the project. Other ways of improving the quality of life for Wellington’s residents and visitors alike are called for.