Hot Topic NBR Focus: GMO
Hot Topic NBR Focus: GMO
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Christchurch Council asset sales concern raised

Concerns are being raised that Christchurch City Council may sell off its $2 billion of assets to pay its share of the quake recovery.

Mon, 02 May 2011

Concerns are being raised that Christchurch City Council may sell off its $2 billion of assets to pay its share of the quake recovery.

The two earthquakes are expected to cost about $8.5 billion.

Labour MPs Clayton Cosgrove and Brendon Burns said the Government was looking at the assets owned by the council and Canterbury regional authorities.

Labour had attempted to amend earthquake recovery legislation to prevent asset sales but that was rejected.

"We all know the Government already intends to sell state assets to reduce its debt, and will partly blame the cost of Christchurch recovery for this," Mr Cosgrove said.

"We are now deeply concerned the Government will go further, forcing the sale of council assets. That will simply load more cost on to a struggling ratepayer base."

The MPs said selling assets would see prices for consumers increase and ownership go overseas. Assets such a majority stake in the Orion power network, and controlling stakes in Port Lyttelton and Christchurch airport were held on behalf of the council by Christchurch City Holdings Limited (CCHL).

"Over recent years CCHL has delivered more than $800m in capital and dividend payments to ratepayers. It has helped fund projects like the Art Gallery and kept rates down by an estimated 15 percent," Mr Burns said.

"The Government might see short-term balance sheet benefits in requiring Christchurch to sell its assets, but ratepayers, businesses and consumers will pay the long-term cost."

Earthquake Recovery Minister Gerry Brownlee told Radio New Zealand that it was up to the council how it funded its share of the quake cost.

"Christchurch City Council is going to have to look for their share from somewhere and it's either from rates or from income of some other source. Exactly how they do that is going to be their decision not governments."

He expected Treasury to have looked at what assets councils had.

"We need to know what capacities out there are for funding. That does not, and I stress does not, extend to the Government directing the sale of assets."

While earthquake legislation gave directive powers all its focus was on efforts to repair and recover from the quakes.

"I think it's a hell of stretch to think that a recovery plan would have in it a direction or a decision that a particular asset was being sold to fund it."

The council owned some properties which it could look at selling.

"Those decisions are rightfully the decisions of the council."

Christchurch Mayor Bob Parker told the broadcaster it was too early to say how the cost would be paid for. He estimated the cost of infrastructure at $3.5 billion but said insurance would cover a lot of that.

"The council's got no plans to turn around and sell chunks of its investments. We've always had the right and the ability to do that and we would work that through with our community if it was to become an issue...

"It's not even a conversation we're having at the moment but if we did want to have it it would be a conversation we would have with our community... we have no such plans."

Mon, 02 May 2011
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Christchurch Council asset sales concern raised