Auckland Future Fund to go ahead with “raid” protections

Auckland Council will go ahead with a wealth fund for Aucklanders after the Governing Body approved the city's Long-Term Plan (LTP) yesterday [on Thursday].

Councillors voted for a $1.3 billion regional wealth fund, which Mayor Wayne Brown said would leave ratepayers "$40 million better-off each year and less exposed to the risks of one-off events".

The vote supported "strict protections against raids" of the fund following feedback from councillors across Tāmaki Makaurau.

The initial proposal involved selling Auckland Council's remaining 11 per cent stake in Auckland International Airport Limited (AIAL) to cover the $500,000 startup cost for an Auckland Future Fund.

Brown told the Governing Body that local board feedback “mostly supported the central proposal for the overall direction of the LTP”, which would mean airport shares would be on the chopping block.

When asked by Manukau ward councillor Alf Filipaina asked what the cost would be to set up the fund, Auckland Council head of financial strategy Michael Burns said it would cost half a million dollars.

“What other capital contributions could be added into the fund?” Filipaina asked.

Auckland Council chief executive officer Phil Wilson said the discussions have been about dividend streams, and "that’s a separate and later decision".

Manukau ward councillors Alf Filipaina (left) and Lotu Fuli (right). Photo / Auckland Council

Burns confirmed that all projected returns from the future fund are based only on the sale of Auckland Airport shares and “invested on an 80/20 growth dividend basis”.

Filipaina pushed for “some legislative conditions" to ensure that Future Fund doesn't get "raided”.

Auckland Council general manager of financial strategy and planning Ross Tucker said there would be protections.

“There will be the trust structure and trustees and then the final layer will be the legislation wrapped around that, so multiple layers that would be of a protection for this fund,” Tucker said.

Manukau ward councillor Lotu Fuli asked if Auckland Council could “100 per cent guarantee” that the fund won’t be sold or raided by any future Governing Body and or the Government.

Tucker said there was no guarantee.

When asked by Fuli about a guarantee on returns from the Auckland Future Fund, Tucker said again that there was no guarantee, “but we are confident we have reasonable assumptions based on robust audit and best predictions”.

Manukau ward councillors Alf Filipaina and Lotu Fuli have previously opposed the sale of Auckland Airport shares under Auckland Council control. Photo / RNZ

Council acting chief financial officer Nicola Mills said the fund would be a “substantive" CCO, or council-controlled organisation.

Filipaina asked if Auckland Council could decide on what to invest in the fund before establishing it.

Mayor Brown replied that airport shares were the only obvious investment.

“We asked over the last 120 hours what we could put in, and the only thing that's obvious to put in is the airport shares,” Brown said to Filipaina.

Brown said there was no guarantee of AIAL shares making a profit.

Albany ward councillor John Watson commented that if Auckland Airport had remained in Auckland Council hands, “over $6 billion would be coming back to the Council now”.

Maungakiekie-Tāmaki ward councillor Josephine Bartley mentioned that 11 local boards supported the fund but did not support selling airport shares to pay for it.

“What efforts were made to find other sources to fund this fund?” Bartley asked.

Auckland Council Programme Manager Tamsyn Matchett replied that the scope of the consultation process was around the airport shareholding and the lease of the port.

Matchett said staff would continue to investigate other options to include in the fund in the next 12 months.