Kielder.
I'm Chelsea Daniels and this is the Front Page, a daily podcast presented by the New Zealand Herald. The Government has set its sights on sorting out Wellington City Council after councilors last week voted against a plan to sell shares in Wellington's airport. The city's long term plan will need to be reopened. It's prompted Local Government Minister Simeon Brown to seek advice on potential interventions, and he has labeled the situation as shambles. So how bad have things
gotten in the capital today? On the front Page Herald, Wellington Issues reporter and host of On the Tiles local Audition, Georgina Campbell is with us to unpack the issues. Georgina, let let's start with the airport's sale. Can you try and summarize this whole saga? How did it start? Wid died counselors change their mind and how did last week go?
Selling? Wellington City Council's thirty four percent share in the airport was part of the long term plan, so that's the ten year budget. The book value of the council's airport shareholding was two hundred and seventy eight million dollars in June twenty twenty three. However, the market value could be as high as five hundred million dollars, so it's quite a bit of money that we're talking about.
Now.
The proceeds of the sale we're going to be put in a perpetual investment fund as a form of self insurance for the council. The sale was designed to help two quite serious financial risks on the books. That's the fact that the council has a two point six billion dollar under insurance problem and the lack of diversity and its investment portfolio. Basically all the council's investments are either
in the airport years or ground. Importantly, Mayor Tory Fano supported the sale and surprisingly, maybe to some managed to find a majority around the council table to vote in favor of it, just remembering that she's a Green endorsed mayor. It's a left leaning council, you know, those on the political left are usually opposed to the sale of public assets. Now, three councilors then changed their minds, and it's really through
a spanner in the works for Tory Fano. The reason they changed their minds is because capital spending was not reduced to maintain this two hundred and seventy two million dollars worth of insurance debt headroom, and that was the condition of those three councilors supporting the sale. So, with the numbers in favor weakening, counselors who were opposed to the sale basically investigated whether they could vote on it
again during the long term plan process. The mayor basically said no, and some councilors voted against the entire long term plan in protest of that. Then we've had this notice of motion to stop the sale, signed by a majority of councilors, that was filed and debated at a full council meeting last week, and of course we know that that notice of motion was successful. The airport's sale
has been stopped. It's a significant loss for Torifano. The sale has divided the council, it's cost her crucial support, and it also comes after this other big loss that she suffered, which was the Reading Cinema debarcle and the plan to get that reopen, which has also failed.
So with that sale having failed, now, what does that mean for the city's finances.
Well, it's not good. News that sale was a crucial part of the council's financial strategy as part of its long term plan. So now the long term plan has to be amended to reflect that the sale is no longer happening. Amendments to the long term Plan aren't unusual
like this happens quite a lot. The problem is is that the repercussions of amending long term Plan to reflect there's no longer going to be an airport sale is that it could mean up to six hundred million dollars in cuts to capital spending need to be found to create that additional debt headroom to respond to insurance risks.
So that's quite a lot of money and it will essentially involve redoing the long term plan because the question is now what a council is willing to cut, and it's always controversial, it's always going to create a lot of debate around the table, and Torri Farno has said that in terms of cuts, everything is on the table. She has outlined some of her bottom lines or things
that are non negotiables for her. That's the one point eight billion dollar investment in water infrastructure, the Golden Mile project, and selling the Council's social housing portfolio. She said she'll fight tooth and nail to protect these things. But you know, she's only one vote around the table and she has acknowledged that.
I mean, that's an astronomical amount of money that they've got to now find. Basically, hey, you're not going to find that at the back of the couch. And rates in the city are already pretty high, right they are.
We have done an analysis of this and the typical Wellington residential rates bill will be three thousand dollars more expensive by twenty twenty eight based on current projections. And this follows the latest rates increase, which averaged one thousand dollars per household, or an increase of twenty one percent. So these figures are based on current projections. They include the Regional Council and Wellington City Council rates and a
new levee to pay for a wastewater sludge facility. But the city council rates account for the lion's share of these bills, and they're so high that Auckland Mayor Wayne Brown actually referenced them in a social media video advertising his citi's relatively low rates increase, which he credited his
ability to stop wasteful spending. And there's this clip in the video where he's pointing to a map of metropolitan rates increases, and he points to Wellington and says, let's face it, things could be worse.
It's no coincidence that we've delivered the last rate rise of any metropolitan center in the country, because, let's face it, things could be worse.
You know, Wellington has basically experienced one of the highest rates increases across the country this year, and that hurts, like people are finding that tough.
I was about to say, when are you moving to Auckland.
Never, I'm definitely loyal Wellingtonian and not even low rates increases could get me to Auckland.
I know that I knew that answer before I even asked it.
Well, you spoke to Torifa now last week for on the tiles after the vote.
Hey, what did she have to say about the situation?
Yeah, so she didn't see the vote as damaging to her merial she and described it instead as a bit
of a blow. She said she woke up the following morning and actually felt that a weight had been lifted off her shoulders, kind of realizing in the past two weeks that things were no longer going her way, and she said, and is saying, you know this week as well, that she has accepted the Democratic outcome, and you know it says it's probably one of the most difficult decisions that some counselors have had to make, and that she's
going to respect that decision. I did ask her, you know, is she worried about what the legacy of her first term would be? And she said, of course, she said, it's been a difficult couple of years. But for this final year, because of course it's local body elections again next year, she's going to be super focused on delivering this long term plan now that it has to be changed, and she believes that they can still get there.
We're in a transition phase, you know, we're pushing through a lot of change, and all that change and transition is for the betterment of our city. Yes it's going to be difficult. Yes it's going to create tensions, but this is what changes like. And you know, hand on heart, I believe in our long term plan, with or without the airport, I will still want to achieve the same things.
But yes, I've made mistakes in the past, but I'm someone who learns from them and moves on because at the end of the day, all I care about is Wellington City.
Incredibly, both Nikola Willis and Simeon Brown have come out and labeled the situation as shambles.
Is that fair?
It's certainly very strong language for those ministers to be using, and I think it highlights the seriousness of the situation, like it's really not a good look to have to amend a long term plan that the council has only
voted on as recently June. And I think, you know, the most worrying thing is I've outlined is the ramifications of that the spending cuts and I think we are in different territory in terms of the threat of government intervention at Wellington City Council compared to recent years.
On Wellington City Council. Are we yet at the stage where the government intervens.
Well it's a shambles And the fact that the long term plan is now having to go back to the drawing board, that it's already one of the most highly biggest increases in rates in the country. That Wellingtonians are sort of despairing about the council's focus on itself rather than the people it's meant to serve. Those are all factors that I'm certainly concerned about, and I know that the Minister for Local Government, Simeon Brown, is concerned about.
He is watching the situation very closely and he has a number of options under the Local Government Act.
What could government intervention even look like?
Well, the Local Government Act says that the government can intervene with the likes of a Crown observer or commissioners if it's believed there is a significant problem. So a problem means that at the very least, something that detracts from a local authorities ability to meet its obligations under the Act, and significant means that the problem will have adverse consequences for ratepayers. So Simeon Brown has confirmed he's asked for advice on potential interventions, and Nikola Willis has
hinted that it might be a Crown observer. That's more likely in the first instance, so commissioners that's when the whole council is voted out and they take over. A Crown observer is a lesser form of intervention in that they come in help the council to address its problems. Monitor the council's progress and then recommend to the local government minister whether further intervention is required.
That's pretty damning and actually, quite frankly, pretty embarrassing for Tory Faro, right like having the government come in and say you're you'll stop playing around with your toys.
We need to get someone to kind of babysit you.
It's certainly not what you want when you're the mayor or an elected member to have to have central government intervene because ministers are worried about the ability for you to do your job and agree on important decisions. And I have asked Tory Faro whether you know she thinks government intervention is required, And I asked her this last week before ministers started using this strong language, and she said, no, you know, she thinks it's a very high bar to
reach something like that, and it is. But she said the council would have to not be meeting its legislative requirements, which she feels they're not even close to that point yet. And she said no amount of public campaigning or trying to convince the minister was going to do that. So it will be interesting to see what the minister does.
She's had a pretty rough go of it during her time as mayor. Already, Hey, there have been a few unnecessary gaffes and a few high profile failed deals. Does toy farnw have what it takes to sort this out?
Do you think?
Well, she certainly thinks that she does. I think only time will tell, or maybe the government will decide that for her by intervening.
Well, the government and the Council have been pre divided on issues since they were voted in. There was that agreement around Golden Mile and the second amount Victunnel where they kind of agreed to disagree. I suppose on both of those going ahead. Is there some potential for politicking going on here?
I think that ministers will be keenly aware of the of a right leaning government intervening in a left leaning council. The optics being is the government just intervening because it
doesn't like the politics of the left leaning council. So my impression is that they wouldn't be using this kind of language unless there was this significant problem or the potential for this significant problem as outlined in the Local Government Act to warrant intervention, and sammyon Brown has basically I think identified that there could be a problem here. He's asking officials what they think. He'll get that advice and then make the final call.
Georgina, you've covered council for years in Willington issues as well.
What would you like to see done to get things sorted out?
I just would like our local politicians to put Wellingtonian's first. This isn't the first council to be accused of division. Andy's Council, which was the previous council, was also dealing with a similar narrative. Wellington's doing it really tough at the moment. There's this narrative that it's dying. I don't think it is. We're going through significant changes and if the Golden Mile project continues, that's going to be really
tough for businesses. There's going to be a lot of rogue cones around for the next couple of years and it would be nice to see some unity coming from the people who we have elected to represent us.
Thanks for joining us, Georgina. That's it for this episode of the Front Page. You can read more about today's stories and extensive news coverage at ends at Herald dot co dot nz. The Front Page is produced by Ethan Seals. Dan Goodwin is the sound engineer. I'm Chelsea Daniels. Subscribe to the front page on iHeartRadio or wherever you get your podcasts, and tune in tomorrow for another look behind the headlines.
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