Issue #962

by Cath Gilmour, We Love Wakatipu Inc chair and former three term councillor

Queenstown Council has removed Queenstown Airport from the draft Long Term Plan’s “strategic asset” list, replacing it with “equity shares” in Queenstown Airport Corporation.

The problem is, this could put council’s vital “supermajority” shareholding at serious risk.  

QLDC’s 75.01% supermajority gives it the right to make binding shareholder resolutions, unilaterally,  at any time, about any shareholder matter. Under QAC’s constitution, dilution of this by just 0.02% would cost council its effective ‘sole owner’ power.

And with that, the loss of protection for our community’s long-term wellbeing against QAC’s profit driven growth agenda and the downstream effects of over-tourism.

Council hasn’t used this power to date. But the potential to do so if needed must be protected.

Because the threat is real. If another pandemic struck and QAC’s $250 million expansion plan left them overextended, the cash-strapped company could demand equity input from council.

If council is too debt-laden to do so, QAC’s constitution then allows them to force council to agree to further shares being created … and sold to minority shareholder Auckland International Airport or a third party.

So council can lose its supermajority without actually selling or transferring any shares.

If we rely on the current wording in the draft LTP and its Significance & Engagement Policy, this could happen without public knowledge, consultation or informed consideration of other options.

As happened in 2010, when QAC created a new 24.99% of shares in itself and secretly sold them to AIA. The mayor, deputy mayor, CEO and CFO had been forewarned, but had to sign nondisclosure agreements.

Councillors were told just one hour before the sale was publicly announced that council no longer owned 100% of this council-controlled trading organisation.  So there’s precedent to justify caution, and reason to apply guardrails.

This risk of share dilution and its ramifications are not mentioned in the 399-page draft LTP, its consultation document or any other related material.

And even more concerning, staff didn’t highlight the change or its possible implications for councillors. Consequently, it wasn’t even discussed during LTP deliberations.

As one councillor acknowledged, “It would have been useful and helped both understanding and transparency for this to have happened.”

Councillors have an easy solution at hand – list “QLDC’s 75.01% QAC shareholding” as the significant strategic asset, not just “equity shares”.

Further, they should return Queenstown Airport to this list. We’ve been given no reason why not. Auckland Council lists CCTO-held assets critical to delivering services as strategic. Why can’t QLDC?

ZQN is a large, valuable land parcel and provides our emergency runway for an AF8 earthquake. Surely that’s a strategic asset worth protecting?

Council recently opened workshops to the public, after calls for greater transparency. Deliberations on LTP submissions should be too.