The chaotic Wellington City Council recently voted against selling the city’s shares in the Wellington airport. There’s no more rationale in the Council owning shares in the airport than say in a chain of brothels. It’s not an appropriate Council function.
I was amused by the investment ignorance of some of the Councillors who wanted the shares sold to create a rainy day fund against a future catastrophe.
This sort of amateurish thinking reveals their lack of investment sophistication. Here’s why.
The mum and dad rainy day fund mentality is illogical. Why? Because if the rainy day arrives then you will no longer have the funds. On the other hand if it doesn’t then the fund was pointless.
A well-run Council with low debt etc will never have trouble raising money should a catastrophe hit the city.
This lack of financial sophistication unfortunately is characteristic of all democracies. That is they attract nobodies with time on their hands as candidates. Truly capable clever people are invariably far too busy to step forward.
10 Comments
No insurnace cover for their assests?
According to an interview Councilor Beown gave to The Platform.. WCC carries around 8 billion of cover versus his estimate of 40 billion rebuild.
Not sure if that is correct… But that is what qas trotted out..
Chch found this out the hard way…
there’s more, quick googling, goverment will carry 60% of disaster cost, leaving local bodies to find the remaining 40% , its commerce so there’ll be some pushing and shoving along the way. on the surface it doesnt sound too bad a deal. As it’s wellington, can imagine the goverent will want to be up and running quickly, …unless they all work from home
Is it coincidence that since the city councils of Auckland and Christchurch respectively privatized their shipping ports , the performance of those two ports has plunged ? Councils ought to not run commercial businesses . Just fix the pipes , get the rubbish collected , and organize someone to fix the pot-holes . Simple !
Yes. Well known fact, government and council run businesses are a picture of efficiency … ” the workers would HAVE to go on the dole if tax funded organisations didn’t employ them “.
.. so it goes, year after year.
Subsidy NZ : maintain stupidity in our time.
Councillors claimed they didn’t want to sell the shares because this would create a huge fund and basically the Greenies would waste it on cycle lanes etc. But what they could do is work out what they would need for a vital project and sell enough shares for that purpose and so on
Brilliant Bob we need to divest ourselves from these morans in control
You’d have to ask yourself what would any of the Councillors; or for that matter the executive, know about running an airports? Efficiently a silent partner, being screwed over by a majority shareholder (which is probably majority offshore owned now)…
The only rational argument to hold it would/could be that its returns are greater than the cost of debt. Maybe they are?
Other concerns on sale include the loss of dividends to offshore interests, who will abuse its monopoly status..
What we do know is offshore dividends now exceed $400 million a week (with much of this extracted by price gouging), and politicians only solution is to take on more debt to make up for this.
The solution, which Eion Musk has advocated, is less regulation to bring on more competition; rather than being bullied by big business. Time will tell whether our politicians are up to that task. Unfortunately, I suspect not..
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