Monday, February 27, 2006

Something Serious.

For those of you not interested in local body politics, and I suspect that's most of you, I suggest you look away now.

Recent events appear to be lending weight to the supposition Christchurch's Mayor, Garry Moore, is having some sort of political sea-change. Garry Moore is a member of the Labour Party and has long been an advocate of preserving Christchurch's assets in the ownership of the City Council. He was publicly in support of this approach as a councilor and also from when he became Mayor back in 1998. It was, and remains a part of Labour 2021's policy. In fact the City Council then earned the ire of the sitting National government for its approach and was given the moniker "The People's Republic of Christchurch".

However things have changed. In recent months the Christchurch City Council has removed the Red Bus Company and Christchurch City Facilities from the strategic assets list. This effectively gives the Council the scope to sell them off if it so chooses. Another major policy change has been the proposal to engage in a joint venture over the ownership of the Lyttelton Port Company. The Council's trading enterprise, CCHL, intends to buy out the remaining 31 percent of shares of the company and then sell 49.9% of the company to a Hong Kong based firm called Hutchison Holdings (more on it and it's owners soon).

This is a major policy shift for the City Council and one that begs a few questions. Such as:

1) Why, if retaining assets for the public good is such a good idea, weren't ratepayers residents consulted on this?

2) Why didn't the Mayor, who's wholeheartedly endorsed these proposals, run on it as a platform at the last local body election?

3) Why is Garry Moore following strategies that appear to contradict Labour 2021 policy?

4) Is this a natural result of ongoing Council restructuring which has seen long serving local government managers replaced by recruits from private enterprise?

Garry Moore's explanation regarding the Port Company deal so far has been to argue that a strong overseas investor is needed to make it viable in the long term. He believes the port has been held hostage by shipping companies which have been playing different ports around the country off against each other to get the best deal possible. On Newstalk ZB today he even raised the spectre that shipping companies were considering making Australian ports the hub of their main operations (which is a bit dumb really because that's the way it is anyway).

If the deal goes through the Council, through CCHL, stands to make about 41 million dollars. When you think about it this isn't a lot of money for a major piece of infrastructure, especially when you consider the cost of buying out the 31 percent of the LPC will have to be deducted from it. The word is the Council will only end up with about 14 million dollars on the deal. Even then there's no guarantee CCHL will return the money to the Council as dividend.

Tomorrow - some little known details about Hutchison Port Holdings and its parent company Hutchison Whampoa Limited, and HWL's chairman Li Ka Shing.

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