- By Laura Kvigstad, Auckland Council reporter funded by New Zealand on Air
Auckland’s civic debt is projected to hit $14 billion in 2025, despite last year’s $835 million airport share sale.
At the Auckland Council’s Governing Body meeting in December, chief financial officer Ross Tucker gave councillors an update, touching on the sale of the council’s airport shares.
The sale of the council’s remaining 9.71 per cent stake in Auckland International Airport Limited exceeded the council’s expectations, selling at $8.08 per share compared to the estimated $7.89.
Proceeds from the sale will be invested in the Auckland Future Fund, a diversified growth fund.
Councillor John Watson said the shares were sold to councillors and the public as a way to reduce the council’s debt.
He highlighted the rise in debt from $11.1b in 2022 to $12.5b now, with projections of $14b this year.
“That’s in spite of the fact that $835m of share sales went into that,” Watson said, referencing the sale of seven per cent of the council’s shares last year that went directly towards paying down debt.
Tucker attributed the rising debt to the council’s capital investments and property buyouts following the 2023 storm events.
“If we had not sold those shares, that debt prediction wouldn’t be $14b. It would be $14.8b,” he said.
Tucker noted that the future fund is expected to deliver higher annual dividends of $40m compared to the returns from the airport shares.
Watson called for a detailed comparison of interest costs against the fund’s yield.
“I’m assuming we’re paying more than $40m in interest for that increase from $11b to $14b,” Watson said.
Tucker clarified that the dividend would help offset council costs.
“Interest costs will go up as long as we keep investing in capital expenditure and borrowing to invest in the city,” he said.
Mayor Wayne Brown supported deeper financial analysis.
“Debt is rising a bit, but assets are rising quite a lot more. You can increase debt and have a lower debt profile,” Brown said.
