Submission
Which option do you prefer?
Option Two – The alternative option – Keep Aurora Energy
Further comment
Firstly, it is disingenuous to say that future income is uncertain. Infrastructure assets generally, and monopolies in particular, are producers of steady, reliable income and are price setters although, in this case, limited by the Commerce Commission settings.
Historical dividends were good, until previous councils began insisting on excess payments, which had to be covered by borrowing, to make up for the promised outside funding, which, incidentally, never existed, for that white elephant, temple to rugby at Logan Park.
Philosophically, should we be selling utilities infrastructure in any case - if so, then why not our water pipes too? Aurora, for several reasons, belongs in the DCHL stable.
Assets less suited to the council stable are Delta [after all just a contracting company] and City Forests.
Although it makes business sense to eliminate debt, to leave a healthier statement of financial position, this is the very situation some future council will seize upon to borrow even more, for another non-income producing, vanity project and we will be back where we are now, but minus Aurora. For this reason, I oppose the sale, as the massive debt we have now, pushing lending thresholds, at least prevents future councils from borrowing more.
The only short term disadvantage is funding the infrastructure network upgrades, which the Com. Com. will include in its future calculations anyway.
Establishing a diversified investment fund has merits, as its income would exceed the cost of debt, if it were judiciously managed, unlike Waipori, which, being long term, indeed perpetual, should, ideally, be managed for long term capital growth, which delivers a much higher yield, instead of being mismanaged for income.
Supporting information
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Submitter
Submission id number: 1045646
Submitter name:
David Ross
Organisation