A week or so ago I took a swipe at 2021
who have the gall to say that the council has adopted a “prudent and sensible financial policy” when people’s rates are going up 60% or so in the next decade. Since then Independent Citizens have been pushing the asset sales line again and have even made it a bottom line for their candidates at the next council elections. However, ICitz turn out to be as dishonest as 2021 because few people know the full picture of what has been done already with the assets in terms of capital release.
An article by John McCrone in the Press on 22 September
spells out exactly what the situation is. CCHL (Christchurch City Holdings Ltd) has, in fact, borrowed hundreds of millions of dollars, which they have paid out to the CCC as a capital release or special dividend. This means they have taken on debt onto the balance sheet of their business portfolio and the costs of servicing that debt.
If CCHL sells any of its assets this is the net outcome of the sales process:
- The proceeds of the sale have to go into debt reduction
- Although reducing the debt also reduces the interest charges, there is also less dividends coming in because of the reduced shareholding.
In other words, what has been done is already taking out money against the assets, without actually selling them. The only real difference is the cost of servicing that debt.
The amount received from this programme is $440 million, which is a lot more than would have been gained by selling off City Care or any of the purely commercial assets. Of course, ICitz wants the council to sell off the monopoly assets like the airport and the port, not just the commercial ones like City Care or Red Bus. It’s possible that sales of these would come to a lot more than $440 million. However there would be the loss of dividend income and so forth.
Largely this is driven by ICitz right wing ideology that wants the council to be small and get out of running businesses. The problem for ICitz is they have shot themselves in the foot because their typical right wing attitude of advocating for ratepayer funds to be poured into projects that benefit business activities, like the new stadium. It’s a case of one type of asset should be sold but another should be run at a loss for their benefit as long as they aren’t paying for it.
The overall picture which we have long learned from central government activity is that the ideology never really changes and the so called benefits are mostly smoke and mirrors. Power prices aren’t going down because of partial privatisation of electricity generators.
The bottom line is that ICitz are at least as responsible for the big rates rise as 2021 and both of them are lying to the public about it and pretending they have answers other than the most obvious one – stop signing up the ratepayers to pay for more and more big cost infrastructure when there is no bottomless pit of funding to pay for it.