WCC Watch Soapbox: Sarah Free – Handle with Care: the Case for the Runway Extension

Next up on the WCC Watch Soapbox is the Green Party’s Eastern Ward candidate Sarah Free. Feel free to leave questions for her in the comments. As always candidates (or readers) are welcome to contribute posts too and can submit pieces here.

Handle with Care: the Case for the Wellington Runway Extension

Like many, I was initially enthusiastic about the idea of direct flights from Wellington to somewhere in Asia. After all, who hasn’t arrived back from a long haul flight to Auckland inwardly groaning at the thought of checking through customs, grabbing baggage and having to transfer to the domestic terminal for yet more waiting, before an eventual trip home?

However, as I started to dig deeper, some disconcerting facts emerged. For example, media reports that the Commerce Commission has recently taken an interest in Wellington Airport’s future ability to make profits. So what is going on?

Reading the Infratil and WIAL (Wellington International Airport Limited) 2013 annual reports, I found that the airport assets are currently valued at around $800 million. Wellington City has a 34% stake in the airport, so we collectively own $270 million or so of airport assets.  WIAL as a whole made a 6.23% return on investment, well under the maximum of 8% allowed by the Commerce Commission.  So far, so good.

But hold on. Wellington City received an annual dividend of $8.8 million for its 34% stake in the airport. Sounds like a lot, until you realize it’s only a 3.3% return.

The Infratil 2013 annual report however (see page 12) , records a surplus for Infratil from the airport of $39 million for their 66 % stake.  Am I wrong in thinking there is some imbalance here?

I think there are some fairly big questions to be asked here before we as a city go rushing into giving away our land and sea, changing the face of Evan’s Bay, spending a cool $200 million (which will add half again to our debt), also adding value to the airport assets, which will mean landing fees and other charges can increase (Commerce Commission rules), and all of this only balanced by our dividend from WIAL, and some yet to be quantified wider economic benefits.

I’m not saying it shouldn’t ever happen- just that in my view we need to be cautious.

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5 responses to “WCC Watch Soapbox: Sarah Free – Handle with Care: the Case for the Runway Extension

  1. Many of us who live in the east know what troubles Infratil causes, and what a bad corporate neighbour they are. Perhaps if Sarah had have spent time in the East, not the South, then she’d understand more about the problems we face here.

  2. Ricki, Believe me, I have spent a lot of time talking with various residents, and have heard a variety of valid concerns about the airport company’s treatment of neighbouring residents. Also the research I have done on the issue and my experience with regulation has formed my present view about Infratil; namely the Council is playing with the big boys here and caution is advised.
    Ask anyone who attended the meet the candidates evening last night what I had to say on the issue.

  3. I attended the Eastern Suburbs meet the candidates evening last night. I had realised the degree of disquiet about the proposed airport extension. In summary the voting ratepayers do not want it. If good govt is the ability to select investments that provide the most benefit to a community, the airport extension is not it. It is touted as a solution, but no one has clearly defined the problem we are fixing. The suggested benefits are vague and could be gained from elsewhere. There is no investment logic As a Wellington Airport shareholder our return of 3.3% is not good enough. Especially if the other shareholder who is NOT a good corporate citizen is getting 6.23%. We shoud see a $16.8m return not $8.8m. Something is fishy. Lets get a better return on what we already have. We are 34% shareholders but gave $1m, (50%) to investigate the proposal further. So we gave away $600,000 to have a look? The land the airport wants is ours; what happens there – we give it to them, they get the asset and charge us more? If a similar scheme was suggested to a bank in a proprty deal, what would they say? 34% of the airport land is ours yet we can not easily access it from the south? That leaves the Eastern Suburbs one way on one way out. Didn’t we just have a reminder earthquake or two – don’t worry we’ll build a bridge over that too. Apparently the reason for raising the proposal was political. We need to know more about this. Sarah spoke well and had more facts to refer to concerning this dodgy deal. She was well prepared. This is a big issue. Economically it does not add up. Evironmentally it will be a disaster. I felt Sarah needed to be convinced about this and that seems very unlikely, whilst others would like to be gently persuaded.

  4. For someone ‘so involved’, the silence when Stan raised the issue over Stewart Duff Drive was pretty horrendous. This has been an issue plaguing residents of the Eastern suburbs ever since the Airport was sold off in the mid-’90’s. Facts and figures are one thing, how things influence the outcomes of peoples lives each and every day is another. With those barriers going in place, how long before we see a change in the ‘free time’ before people have to start paying. Infratil is no friend to the residents of Wellington. Just witness them, and their subsidiary, NZ Bus, when buses were taken off the roads due to ‘safety concerns’.

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