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Mayor Wayne Brown is proposing selling the council’s stake in Auckland Airport, which he says could raise almost $2 billion.

Jettisoning the airport holdings could help address an estimated $295 million budget shortfall but the proposed sale is likely to be controversial.

Brown this morning said a sale could reduce debt servicing to ratepayers by at least $88 million annually and cut next year’s rates rise by nearly a third.

The council’s stake in the airport is its largest financial holding.

Based on yesterday’s closing price, Auckland Council’s 18 per cent stake is valued at $2.166b.

The sale of the minority shareholding is part of Brown’s 2023/24 budget proposal.

Auckland Mayor Wayne Brown says ratepayers will fork out $88 million in debt servicing costs for a shareholding that’s not even big enough to give the council a seat on the board. Photo / David White

The mayor’s office said that proposal would go to the council’s governing body next week, for consultation next year.

The shareholding was too small to give the council a seat on the board.

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“Next year, Auckland ratepayers are set to fork-out $88 million in debt servicing costs to maintain a non-controlling shareholding,” Brown said today.

The mayor today said due to rising interest rates, debt servicing could soon cost $100m a year for ratepayers.

“If the airport needs additional capital for new projects, Auckland ratepayers could be asked to stump up extra cash or see our ownership stake fall even lower,” he added.

Yesterday, Brown said he was bringing “a fresh pair of eyes to the annual budget” and wanted to roll out the biggest savings package in the council’s history.

He said his budget proposal will include $60 million in savings from Auckland Council spending in 2023/24, as well as $33m in cuts for the current financial year.

“This is the biggest savings package in Auckland Council’s history and will help prevent a rates rise of more than 13 per cent, which would otherwise be required to bridge the budget hole.”

Savings blitz proposed

The mayor’s office said a council financial committee would be asked to find another $7.5m from Auckland Transport (AT), and $5m from Auckland Council and from other council-controlled organisations in savings.

Brown wanted $57.5m in proposed savings from AT, economic and cultural agency Tātaki Auckland Unlimited and urban regeneration and land mangement agency Eke Panuku for 2023/24.

Last month, a mayoral spokesman told Local Democracy Reporting selling airport shares was an option to address the council’s financial shortfall.

“Personally, the mayor does not regard an 18 per cent share in a company that isn’t paying dividends to be a strategic asset but others, including councillors, may want to make the case that it is.”

LDR at the time said Covid-19 and rising inflation and interest rates were likely causes impacting the city’s revenue.

Manukau ward councillor Alf Filipaina previously said he was opposed to the selling the council’s stake in the airport.

“We’ve kept the shares because of the benefits the airport brings to Manukau and Auckland,” Filipaina told LDR.